Cases Studies English

7/29/2019 Cases Studies English

1/116

EXPORT IMPACT FOR GOOD

PublIC-PRIvATE COllAbORATIOn

FOR EXPORT SuCCESS

CASE STuDIES FROM bARbADOS, GhAnA,

InDIA, ThAIlAnD AnD MAlAySIA


2/116

Street address: ITC54-56, rue de Montbrillant1202 Geneva, Switzerland

Postal address: ITCPalais des Nations1211 Geneva 10, Switzerland

Telephone: +41-22 730 0111

Fax: +41-22 733 4439

E-mail: [email protected]

Internet: http://www.intracen.org

The International Trade Centre (ITC) is the joint agency ofthe World Trade Organization and the United Nations.

International Trade Centre 2011


3/116

Public-Private collaboration

for exPort SucceSS

caSe StudieS from barbadoS, Ghana,india, thailand and malaySia

Geneva 2011


4/116

ii

ABSTRACT FOR TRADE INFORMATION SERVICES

ID=42491 2011 F-01.04 PUB

International Trade Centre (ITC)Public-private collaboration for eport success: Case studies from Barbados, Ghana, India, Thailand and Malasia

Geneva: ITC, 2011. i, 101 p.

Compilation of case studies aimed at business leaders, policmakers and development practitioners, showcasing

successful eperiences of public-private dialogue in developing countries outlines activities driven b the governments

and targeted at private sector plaers in the form of public-private partnerships for service deliver and public-private

consultative bodies; presents private sector initiatives targeted at public sector plaers in the form of business advocac;

demonstrates essential role of the private sector in trade and development through eamples featuring the Barbadian

tourism industr, customs services in Ghana, Thailands automotive industr, Penangs eport hub for electronics, and

Indias tetile parks.

Descriptors: Partnership, Public Sector, Private Sector, Case Studies, Barbados, Ghana, India, Malaysia, Thailand.

English, French, Spanish (separate editions)

ITC, Palais des Nations, 1211 Geneva 10, Switzerland (www.intracen.org)

The designations emploed and the presentation of material in this publication do not impl the epression

of an opinion whatsoever on the part of the International Trade Centre concerning the legal status of an

countr, territor, cit or area or of its authorities, or concerning the delimitation of its frontiers or boundaries.

Digital image on the cover: iStockphoto

International Trade Centre 2011

All rights reserved. No part of this publication ma be reproduced, stored in a retrieval sstem or transmitted in an form or

b an means, electronic, electrostatic, magnetic tape, mechanical, photocoping or otherwise, without prior permission in

writing from the International Trade Centre.

P245.E/DCP/BTP/11-IX ISBN 978-92-9137-393-2

United Nations Sales No. E.11.III.T.2


5/116

iii

foreword

The global community rmly acknowledges the critical importance of the private sector as an engine of economic growth,sustainable development and povert reduction. However, the private sector needs an enabling, business-friendl

environment to effectivel harness this potential.

Public-private collaboration has been a ke driver in countries strategies for successful integration into the global econom.Eperience shows that governments in developing and least developed countries focusing on eport-led growth strategiesmust establish a mechanism for sustained and inclusive dialogue between the public and private sectors.

Epanding global trade opportunities is the focus of the International Trade Centres (ITC) work with enterprises, trade supportinstitutions and policmakers. B developing a competitive private sector supported b strong and transparent institutions,eports can help to drive inclusive, sustainable development and become a positive force for good in communities.

Promoting public-private dialogue in formulating countries trade policies, legal frameworks and regulator mechanisms isat the heart of ITCs work. We bring public and private stakeholders together in a structured process to nd solutions forissues affecting business performance and eports. We work together to design viable eport and development strategies.ITC contributes to the effectiveness of these dialogues b, among other initiatives, supporting well-informed businessadvocac through sharing eperiences from around the world.

ITC commissioned the case studies in this book to showcase the successful eperiences of public-private collaborationin developing countries engaged in the process of integrating into the global econom. In some instances, public-privatedialogue has resulted in successful public-private partnerships.

The achievements in Barbados with the European Economic Partnership Agreement on tourism services; in Ghana withan integrated customs services; in Thailands automotive industr; in Penang, Malasias eport hub for electronics; and inIndias thriving tetile parks clearl demonstrate the essential role plaed b the private sector in trade and development.

Trade, development and povert reduction are strongl linked. B creating the conditions for robust, sustainable, eport-ledgrowth, governments and the private sector are also making a valuable contribution towards achieving the United NationsMillennium Development Goals to reduce povert.

We hope these success stories will inspire business leaders, policmakers and development practitioners to build on bestpractice for using development assistance to address market failures and to leverage private sector investment for thegreater good. We also believe these stories make a strong case for Aid for Trade.

ITC believes now is the time to move from dialogue to action, which is exactly what has happened in the countries proledin this book.

Patricia FrancisEecutive DirectorInternational Trade Centre


6/116

iv

acknowledGementS

Introduction Public-private collaboration for eport success

Rajesh Aggarwal, Chief, Business and Trade Polic Section and Andrew Huelin, Consultant, Business and Trade PolicSection, ITC, wrote the introduction.

Chapter I Business advocac wins markets in Barbados

Natasha Ward, Trade Polic Analst and Consultant with the Shridath Ramphal Centre for International Trade Law, Policand Services, Barbados; and Pierre Sauv, Deput Managing Director and Director of Studies at the World Trade Institute,Bern, Switzerland, wrote this case stud. The are entirel responsible for the views epressed herein.

A stud of this nature entails consulting ke actors in the negotiations. The authors are indebted to Samuel Chandler,Permanent Secretar (Foreign Trade Division) at the Ministr of Foreign Affairs, and Foreign Trade of Barbados; JulieMapp, Consultant to the Foreign Trade Division of the Ministr of Foreign Affairs and Foreign Trade; Russell King, formerConsultant to the Foreign Trade Division of the Ministr of Foreign Affairs and Foreign Trade; Ramesh Chaitoo, ChiefServices Negotiator of the Caribbean Regional Negotiating Machinery; Lisa Gale, Chief Research Ofcer (ag.) with theMinistr of Tourism; Natalie DeCaires, Industr and Advocac Manager with the Caribbean Hotel and Tourism Associationand Sue Springer, Eecutive Vice-President of the Barbados Hotel and Tourism Association, for helpful discussions. Specialthanks are also etended to Ramesh Chaitoo for his constructive and insightful comments in revising the draft of casestud.

Chapter II Boosting eport competitiveness in Ghana

The case stud has been prepared based on presentations made b Norte Omaboe, Eecutive Chairman, GCNet, Ghanaat an ITC seminar and on a paper prepared b Emmanuel Darko, Deput General Manager, GCNet, Ghana. We alsoacknowledge the support of Mr. Omaboe in organizing visits of participants of ITCs programmes to the GCNet to discussthe operations and the factors contributing to the success of the GCNet.

Chapter III Thailands successful journe

Prema-Chandra Athukorala, Professor at the Arnd-Corden Department of Economics, Australian National Universit; andArchanun Kohpaiboon, Thamassat Universit, Thailand, wrote this case stud. The are entirel responsible for the viewsepressed.

Chapter IV Growing with global production sharing in Malasia

Prema-Chandra Athukorala, Professor at the Arnd-Corden Department of Economics, Australian National Universitprepared this case study based on his eld visits and interviews with senior ofcials of government and private sectoreconomic facilitator organizations, senior managers of major MNE afliates and representatives of chambers of commerceand industry. Interviewees include a number of ex-CEOs and senior managers of leading MNEs, ofcials of chambersof industr and trade, and former prominent policmakers, including Chet Singh, the founding General Manager of thePenang Development Corporation who held that position for over two decades.

Chapter V Creating integrated tetile parks in India

Biswajit Dhar, Director General, Research and Information Sstem for Developing Countries, New Delhi, India; and T.S.Vishwanath, Principal Advisor with APS-SLG Law Ofces, Delhi, India, wrote this case study with support from RCM Reddyand Prashant Sood of IL&FS Cluster Development Initiative Limited, New Delhi.

Other acknowledgements

The case studies were prepared under the overall guidance of Friedrich Von Kirchbach, Director, Division of CountrProgrammes ITC. Rajesh Aggarwal, Chief, Business and Trade Polic Section, ITC, supervised the preparation of all casestudies. Andrew Huelin, Consultant, Business and Trade Polic Section coordinated the organization of material andassisted in the review process. Dianna Rienstra, Phoeni Ink Communications, Brussels, was the editor and advisor for thispublication. The publication was managed b Natalie Domeisen. Desktop publishing was carried out b Laurna Arribat.


7/116

v

contentS

foreword

acknowledGementS

abbreviationS

introduction 1

the united nationS and Private SectordeveloPment 2

Public-Private dialoGue in trade Policy iScritical 3

towardS a balanced aPProach 4

Ss ss p g 4

bg g p ps 4

isgs sss psp 5

esg spp p 5

challenGeS to effective Public-PrivatedialoGue 6

Pre-requiSiteS for dialoGue 7

five country caSeS 7

chaPter i 11

buSineSS advocacy winS marketSin barbadoS 11

caSe Study executive Summary 12

a SnaPShot of touriSm in barbadoS 13

r s p 13

buSineSS advocacy GrouPS GetorGanized 14

eggg s 15

cg g pss 15

t G s 15

t c h tsass 15

a better landScaPe for touriSmServiceS 18

m ss gs 18

css- spp sp ss (ms 1 2) 18

c ps (m 3) 18

tp ps pss sss ppss (m 4) 18

a market acceSS Scorecard 19

cs s s 19

m g 20

cp p sps 20

t- p g 21

concluSion 21

chaPter ii 25

booStinG exPort comPetitiveneSS inGhana 25


innovative trade facilitation 27

t p s 27

ep- g g ss 27a 27

overcominG challenGeS 28

csg g ps 28

Sg p 29

makinG leGal and reGulatory chanGeS 29

assg sps 30

oPeratinG the Project 30

mgg g 31

Project achievementS 32

Spg ss ps 32

cg gs s 32

fg s s gss 32

isg 32

ipg p pss 33

SucceSS factorS 33

G spp 33c ps 34

Projectspecic infrastructure34


8/116

vi

a ps pp 34

Tangible benets 35

tg, ss p g 35

rspsss gg s 35

Sustainable self-nancing 35

imPlementation challenGeS36

og s ss36

esg p 36

upgg psss gs 36

Assuring condence and ensuring security36

concluSion 37

chaPter iii 41

thailandS SucceSSful journey 41


thailandS reSPonSive Policyenvironment 43

Sg sg s g 43

es s 44

from imPort SubStitution to Global

inteGration 44

induStry evolution 45

chanGinG dynamicS of Production 46

ep s ps 48

the induStryS GrowinG role in theeconomy 49

thailandS PoSition in ProductionnetworkS 51

lgs: ss ps spps 51

what drove thailandS SucceSS? 53

G ss s 53

f, s p 54

ds s s 55

concluSion 55

annex i: chartinG trade and inveStmentPolicieS 1960-2008 57

annex ii: the evolution of the denSoaffiliate in thailand, 1973-2005 58

chaPter iv 61

GrowinG with Global ProductionSharinG in malaySia 61


the riSe of Global Production 62

PenanGS oriGinS aS an exPort hub 63

Policy reformS revitalize the economy 63

n 64

f s, s ss s p 65

is p 65fgg mne-Sme s 66

v g pgs 66

lsss ps 68

evolution of the exPort hub 68

a ss g 69

f ss s s p pps 71

PenanG weatherS Global chanGeS 72

mg g- ss 72dsg p s 73

cs psps ps 73

inveStment trendS and comPanyProfileS 74

exPort Performance 78

a vibrant induStrial centre with economy-wide imPact 80

concluSion 85

annex: SourceS and methodoloGy 87

chaPter v 91

creatinG inteGrated textile ParkS inindia 91


market trendS 92

Sggs g94


9/116

vii

eSSentialS for inteGrated textile ParkS 95

fg 96

S s, s ss 96

ip g p-p

psps 96P g 97

as ss 97

t s gs 97

PochamPally handloom Park 97

More prots for producers 98

Sgs sss 99

brandix india aPParel city 99

a g s ss 100

G s 100P s 100

concluSion 100

a p 100

tableS

t 1: Sgg ss p sp s 3

t 2: m s cariforum ss ss s 17

t 3: hggs ts ss s cariforum ePa 19

t 4: P p (s) t sss,1989-2006 46

Table 5: Production capacity of carmakers classied by type s, 2006 47

t 6: w p p 20pg s, 2000 2008 48

Table 7: Automobile exports and imports classied by vehiclep, 1999-2007 50

t 8: d ps t,1999-2007 (%) 50

Table 9: Automobile (CBU) production in Thailand classied s, 2000 2008 52

t 10: ds ss is, ms, Ppps t, 19802005 56

Table 11: Domestic vehicle sales in Thailand classied by p, 1990-2008 56

t 12: b ps pss pg

Pg, 1970-2004 74

t 13: app s Pg, 1980-2008 75

Table 14: Ownership structure of manufacturing rms inPg, s ags 2008 75

t 15: tp 25 g pss Pg: p p s, s ags 2008 76

t 16: tp 25 pss Pg,s ags 2008 77

Table 17: Home-country prole of foreign rms Pg, 2007 79

t 18: ms ps Pg ,ps s ms ps 79

t 19: Pgs ps: ps, p/output ratio and foreign rms share in exports, 200581

t 20: P p GdP ms ms Ss s 82

t 21: m gss s p, 2004 2009 83

t 22: cps GdP p Pg,1970-2008 83

t 23: fg-sp ms g Pg , 2005 84

t 24: mg p, p p , p g g/s: Pg , 2005 84

t 25: Sp i s g s,2000-2009 93


10/116

viii

fiGureS

fg 1: P s s ps 5

fg 2: r g s s, 2001-2007 14

fg 3: b S psss s 31

fg 4: r gs k i ap,2002-ap 2008 33

fg 5: v p s ps, 1961-2008 47

fg 6: S ps sps t, 1990 2008 49

fg 7: a ps t, 1990-2009 49

fg 8: P g s s Ss as 52

fg 9: m ps Pg: s ms ps, 1990-200978

fg 10: v, p s sps ms, 1997-2009 80

fg 11: ms p gs: Sg, Pg

ss, 1976-2006 85

fg 12: G p s g s,2001-2008 93

fg 13: y p, 2000-2008 93

fg 14: c p, 2000-2008 94

fg 15: P - gs, 2000-2008 94

fg 16: S s g is ps,2000-2009 95

fg 17: j - Pps -sg sg 98

boxeS

b 1: P-p p ps msssss 8

b 2: hggs p s s ss ss s 16

b 3: wto s spp 16

b 4: b Gcn: s s 30

b 5: Gcn ggp g 34

b 6: t ftz pg 66

b 7: t Pg S dp c g spp s 67

b 8: is p pg 69

b 9: eg tg hgs b: sp p70

b 10: lkt is b: g 71

b 11: Pp h P pss 99


11/116

i

abbreviationS

The following abbreviations are used:

ACP African Caribbean Pacic

ATC Agreement on Tetiles and Clothing

AMD Advanced Micro Devices

ASEAN Association of Southeast Asian Nations

PSTT Barbados Private Sector Trade Team

BOI Board of Investment

BIAC Brandi India Apparel Cit

CRNM Caribbean Regional Negotiating Machiner

CARICOM Caribbean Communit

CHTA Caribbean Hotel and Tourism Association

CPC Central Product Classication

CBU Completel built unitsCKD Completel knocked down

CEPS Customs Ecise and Preventive Service

EPA Economic Partnership Agreement

EDI Electronic data interchange

EU European Union

FDI Foreign direct investment

FTAs Free trade agreements

FTZs Free trade zones

GATS General Agreement on Trade in Services

GM General Motors

GCNet Ghana Communit Network Services LimitedGPHA Ghana Ports and Harbours Authorit

GSC Ghana Shippers Council

ICT Information and communications technolog

ITP Integrated tetile park

IFC International Finance Corporation

ISO International Organization for Standardization

ITC International Trade Centre

LEDs Light-emitting diodes

LCR Local content requirement

MIDA Malasian Industrial Development Authorit

MDGs Millennium Development GoalsMFN Most favoured nation

MFA Multibre Arrangement

MNEs Multinational enterprises

MRA Mutual Recognition Agreements

OEM Original equipment manufacturer

PDC Penang Development Corporation

PSDC Penang Skills Development Centre

PCBA Printed circuit board assembl

PAC Project Approval Committee

PMC Project management consultant

PPD Public-private dialoguePPPs Public-private partnerships

SITP Scheme for Integrated Tetile Parks

SMEs Small and medium-sized enterprises

SERI Socio-Economic and Environmental ResearchInstitute

SGS Socit gnrale de surveillance

SPV Special purpose vehicle

SITC Standard International Trade Classication

WTO World Trade Organization


12/116

iStockphoto


13/116

introductionpublic-private collaboration for exportsuccess

the united nations and private sector development 2

public-private dialogue in trade policy is critical 3

towards a balanced approach 4

challenges to effective public-private dialogue 6

pre-requisites for dialogue 7

five country cases 7


14/116

INTRODUCTION2

introductionPublic-Private collaboration for exPort SucceSS

The worlds pressing problems are far too comple and

resource-intensive to be addressed b the public sector

alone. It is now widel recognized that a health, vibrant and

competitive private sector is vital to ensuring growth and

reducing povert. The private sector has the potential to be

an engine for economic growth, improving individual well-

being in all countries.

This is a signicant shift in development thinking and

practice. However, institutional responses at the national

level to harness the potential of the private sector and

include it as a development partner are still evolving.

Until recentl, mainstreaming this approach into the

development approaches of national governments,

donor governments and multilateral organizations has

been limited. The United Nations supports private sector

development, particularl as a fundamental wa to advance

the Millennium Development Goals (MDGs).

ITC commissioned ve case studies to showcase the

successful eperiences of public-private collaboration in

developing countries. Some case studies outline activities

driven b governments and targeted at private sector

plaers in the form of public-private partnerships for service

deliver and public-private consultative bodies.

Other initiatives are driven b private sector plaers and

targeted at public sector plaers in the form of business

advocac. In some instances, public-private dialogue has

resulted in highl successful public-private partnerships,as in the case of Ghana where the private sector is a

shareholder in an initiative to integrate customs services.

The cases cover from the following countries and sectors:

Barbados tourism;

Ghana customs services;

Thailand automotive industr;

Malasia sourcing multinationals;

India tetiles.

the united nationSand Private SectordeveloPment

Poverty is something that no one should

endure. Markets can ourish only in societies

that are healthy. And societies need healthymarkets to ourish. That is why we have to

boost our private-public alliance. We need to

bring knowledge, resources and innovation

together in a way that links sustainability with

opportunities for growth.

Ban Ki-moon, United Nations Secretar-General

These remarks b the UN Secretar-General on the

occasion of the First Private Sector Forum on the Millennium

Development Goals in 2008 emphasized a shift in thinking

at the UN level that had begun much earlier. To track theorigins of this shift it is useful to draw upon earlier events.

The international communit established the MDGs in 2000

to eradicate povert. The outlined new roles for the private

sector, primaril as:

An engine of improved economic growth;

A means to generate the required domestic resources

for investments in human resource development through

health, infrastructure and education;

A potential provider of some of these essential services;

A direct partner in trade and technolog transfers.

The UN Millennium Project recommended that each

government collaborate with the private sector to design a

development strateg to help create a favourable business

environment. Government actions are essential to creating

an enabling environment for public sector development

that diminishes the risks, lowers the costs and barriers, and

raises the rewards and opportunities for competitive and

responsible enterprises.

In Jul 2003, to respond to the slow progress made on

achieving the MDGs, then UN Secretary-General, Ko

Annan requested a Commission on the Private Sector andDevelopment as a fundamental wa to advance the MDGs.

He noted:


15/116

INTRODUCTION 3

Our experience has shown that a large

part of the work for development is about

preparing the ground for sufcient private

sector activity to provide the jobs and income

needed to build a more equitable and

prosperous society.

Yet, the UN has only sporadically tapped the

power that can be drawn from engaging the

private sector in the work of development.

The Commission was tasked to answer two fundamentalquestions: How can the potential of the private sector andentrepreneurship be awakened in developing countries?and How can the eisting private sector be engaged inmeeting that challenge?

The Commission created a conceptual framework and aseries of activities. Although the conceptual framework wasnot specically designed for the trade and development

contet, it is ver relevant (see table 1). The Commissionpromotes a new tpe of alliance between large and smallcompanies, between public and private actors, betweenforeign and domestic entities, and between commercialand social investors. Activities can be driven b publicactors (local governments, donor governments anddevelopment agencies) and private actors (companies, civilsociet organization and foundations) in three fundamentalspheres:1

The public sphere, promoting the reform of laws,regulations and other barriers to growth;

The public-private sphere, facilitating cooperation andpartnerships between public and private plaers toenhance access to such key factors as nancing, skillsand basic services;

The private sphere, encouraging the development ofbusiness models that can be scaled up and copied andthat are commerciall sustainable.

The activities detailed in table 1 are based on thefoundations of private sector development: the globaland domestic macroeconomic environment; phsical andsocial infrastructure and the rule of law; and the pillars ofentrepreneurship access to nance, skills and knowledge.

This necessitates reforming laws, regulations and otherbarriers to growth; facilitating cooperation and partnershipsbetween public and private plaers to enhance access toproductive resources; and encouraging the developmentof business models that can be successfull replicatedand that are commerciall sustainable. As stated in theUnleashing Entrepreneurship report:

Most of the recommended actions involvemore than one of the actors working together.

Where governments are implementing policychange, it is often with the direct supportand involvement of multilateral development

institutions.

Where the private sector is taking a moreactive stance on sustainable development,

it is often with civil society raising theprole of this issue. Where governments areimplementing regulatory reform, it may be indirect consultation with representatives of the

private sector.

Public-Private dialoGue intrade Policy iS critical

Private operators alone cannot achieve optimal allocationof resources and state actors ma not be able to address

Table 1: Strengthening the effectiveness of private sector development activities

Targeted at publicsector players

Targeted at privatesector players

Driven by private sector players

Companies Civil societ organizations

Foundations

Setting broader standards (industrnorms, sustainabilit, corporate

governance)

Lobbing for polic changes

Promoting participator processesthrough social dialogue

Business linkages and partnerships

Investment, including foreign directinvestment (FDI)

Mentorship for entrepreneurs

Driven by public sector players

Local governments

Donor governments

Development agencies

Polic reform

Polic advice

Funding and delivering technicalassistance for public sector reforms

Financial transfers (aid, loans)

Public-private partnerships, foreample, for basic service deliver

Public-private consultative bodies

Privatization or contracting

Investment promotion

Direct business development services

Direct nancing

Source: Unleashing Entrepreneurship (Commission on the Private Sector and Development, UNDP, 2004). Available at: http://www.undp.org/cpsd/documents/report/english/fullreport.pdf.


16/116

INTRODUCTION4

market failures on their own. Effective public-privatedialogue can address failures in government policdesigned to overcome market failures. It can also reducepolic uncertaint, promote innovation and create wealth.

Effective public-private dialogue takes place within astructured mechanism at the highest level of government.The objective is to facilitate the reform process b involving abalanced range of public and private sector actors. In 2010,the case for collaboration between the private sector andgovernment in socio-economic development was summedup b economist Dirk Willem te Velde, Programme Leaderof the Investment and Growth Programme at the UnitedKingdoms Overseas Development Institute:2

There are market failures (the market alone

cannot achieve an optimal allocation of

resources) and there are government failures

(state actors may not be able to address

market failures on their own). Effective

business and government interaction can

address such market and coordination

failures and government failures through

cooperation, and can reduce policy

uncertainty.

When the state and business interact

effectively, they can promote more efcient

allocation of scarce resources, conduct more

appropriate trade policies and regulations,remove the biggest obstacles to trade and

create wealth more efciently.

towardS a balancedaPProach

For markets to work efciently and deliver desired outcomes,an effective government is needed to create an enablingenvironment, provide public goods such as infrastructure,and mitigate negative eternalities, such as pollution and

other harmful environmental effects.

A further challenge in man countries is to enhancetransparenc and accountabilit in the design andimplementation of policies aimed at fostering private sectordevelopment to ensure that private sector-led growth canbenet society as a whole.

Toda, man governments are anious to demonstrate thatthe are responding to business b creating an enabling pro-business environment to boost investment and economicactivit. Because regulation is needed in some instances,man governments are increasingl seeking the advice of

the private sector.

ITC supports public-private dialogue because it is thefoundation of business advocac in trade polic. Throughbusiness advocac, business organizations aim atinuencing government and policies and become anintegral part of the legitimate and democratic process

of policmaking in developing countries and emergingmarkets.

In terms of optimizing effective public-private interactions,there eist considerable differences between countries.Some have been more adept and able to overcomenegative perceptions of private sector involvement, suchas rent-seeking and collusive behaviour. Others have beenless inclined or adept at engaging with the private sector.The case studies presented in this book showcase somesuccessful eperiences of public-private interaction.

Effective public-private dialogue leads to mutually benecial

collaboration between the government and the privatesector. Public-private dialogue can la a foundation forpublic-private collaboration and public-private partnerships.

SuStainable conStituencieS fortrade Policy and reGulatoryreform

Policy reforms are the most tangible benets of public-privatedialogue. These can include new legislation, amending orscrapping of eisting legislation, removing or simplifingregulations and controls, standardizing procedures across

different jurisdictions and establishing new institutions.

While the structured consultation of a public-private dialoguemechanism can have an immediate effect in improvingthe quality of particular reform efforts, its deeper benetlies in building a sustainable constituenc for trade policand regulator reform. The increased transparenc andparticipation in the trade polic processes is recognizedas enhancing trust and condence in the process, whichin turn facilitates implementing trade polic and regulatordecisions. Some of the main benets of such dialogues aresummarized below.

broadeninG Good Policy oPtionS

The World Banks Public-Private Dialogue Handbook3notes that public-private dialogue can contribute to thepolic, administrative and political feasibilit, or the politicaleconom, of reform issues. According to the World Bank,the political econom of the reform process depends onthree related elements:4

Policy desirability the political interest of the governmentin investing efforts in reforms, depending on factors suchas commitment of the leadership, conguration of political

factions, upcoming elections, advocac b private sectorand civil societ organizations, the macroeconomicsituation, etc.


17/116

INTRODUCTION 5

Administrative feasibility the institutional capacitto develop and manage public institutions within theframework of public sector reform processes.

Political feasibility the coherence of the framework ofdifferent reform processes and the institutional capacit

to manage reform processes.

As the World Bank Handbook suggests:5

PPD [public-private dialogue] can contribute

to all three elements. Its main impact is likely

to be on raising the importance of issues on

the governments agenda and building a

constituency for reform, and thus increasing

the policy desirability and feasibility of these

reforms.

Through government participation inPPD, ofcials are exposed to exchange

of experiences that contribute to capacity

building within the public sector. However,

additional efforts are needed to build

capacity for public sector reform processes.

The relationship among these three elements is shown ingure 1.

inSiGhtS from the buSineSS

PerSPective

Governments that recognize the constraints faced b theprivate sector tend to develop reasonable prioritizationplans and workable reforms. Trade polic decisions andnegotiation strategies rened through a consultative

process that engages legislatures, business groups andcivil societ are frequentl more effective. This dialogueensures that trade policies are better attuned to thecommercial environment, which makes the policies morebroadl endorsed and sustainable.

Public-private dialogue can help government tap into theexperience of rms, a potentially valuable resource fordesigning public policies. The effectiveness of economicpolicies would be signicantly enhanced if the privatesector could provide policmakers and bureaucracies withthe information the need to anticipate the likel impact ofpolic changes.

There are mriad different sectors, approaches and actorsthat governments could choose to prioritize for assistanceand polic reforms. Governments must determine whichsectors and regulator reform issues are the major stumbling

blocks to effective trade, and devise plans accordingl.Collaborating with the private sector gives policmakers theinformation the need to set priorities.

enSurinG credibility and SuPPortfor Policy reform

Public-private dialogue is a tool that government can useto change the private sectors perception of polic, gaincredibilit, share information and establish a reputation forfavouring private sector development. Governments thatpa attention to the private sector are better placed to design

and eecute credible and effective reform programmes.Entrepreneurs who are involved in the reform process willbe more inclined to support polic reforms.

Through active engagement with the private sector, greaterconsensus about and ownership and credibilit of polic

Figure 1: Policy desirability and administrative and political feasibility

Adminis-tratve

feasibility

Policy desirability

Politcal

feasibility

B

A

C

Administratve

feasibility

Policy desirability

Politcal

feasibility

BA

C

D

D

Capacity building Reform management

Learning about good practce

Source: The Public-Private Dialogue Handbook: A toolkit for business environment reformers, World Development Report 2005, World Bank, 2005.


18/116

INTRODUCTION6

reforms and negotiating positions can be obtained. Thisbuilds trust and enhances the capabilit and credibilit ofpolicmaking. The Organisation for Economic Co-operationand Development reports that in Meico, consultativebodies linked to the Economic Solidarit Pact (a stabilization

programme in late 1980s) helped in the 1990s to movefrom a situation of mutual suspicion to generate greaterunderstanding, trust and networking between governmentand top business leaders.6

An effective public-private dialogue process can makegovernment aware of the impact of reforms on the ground,as well as generate greater awareness of the changes.There must be a clear structure in place:7

Without the structure imposed by public-

private dialogue, business advocacy tends to

nd a narrower outlet: one sector lobbies for

a specic reform, which then has unwelcome

effects in other sectors, which lobbies for its

reversal, and so on.

The monitoring and evaluation systems put in

place by a [public-private dialogue] initiative

promotes a culture of compliance and entice

governments to perform regulatory impact

assessments.

challenGeS to effectivePublic-Private dialoGue

The context for public-private sector dialogue inuences the

qualit and outcome of dialogue greatl. Man developingcountries have weak public and private sector institutions,absence of a culture of consultation and inclusiveness,rivalries among private sector institutions, and in somecases, lack of representation. These lead to four challengesfor effective dialogue:

Reinforcing vested interests. Public-private dialoguecreates both an opportunit and a risk when other linesof communication between government and societ areweak. Done poorl, public-private dialogue can resultin an unhealthy inuence by an unrepresentative group

of stakeholders, reinforce links between politicians andlobbists, and provide a veneer of legitimac for badpolicies.

Speaking with one voice. In man countries the privatesector is not well-organized and does not speak with onevoice. Not all private sector interests can be reconciled,as views ma be fundamentall opposed depending onthe issues. However, there is still an urgent need to cometogether and speak with a coherent and unied voice.

Fair and broad representation. The process ofconsultation is a means of generating consensus onpublic polic. Broad representation is an effective means

of overcoming vested interests that undermine theprocess.

Negative attitudes to dialogue. Successful dialoguedepends on the mindset and capacit of the participants.In particular, the attitude of the public sector can promote

or destro the public-private dialogue process. Thehighest-level government ofcials must encourage andparticipate in such dialogues. Effective communication isthe ke to an meaningful dialogue process.

Business advocac is tpicall resource-intensive andtechnical in nature. It involves engaging members to gatherinformation, identifing concerns, conducting analsis,reconciling different interests and initiating appropriatefollow-up action with the government. However, in mandeveloping countries, in particular the least developedamong them, business associations tpicall have lowlevels of nancial and human resources, which adversely

impacts on their abilit to meaningfull participate in tradepolic development.

A lack of funding often prevents business associations fromdeveloping the required level of technical and sophisticatedknowledge on trade polic and negotiations issues toengage effectivel with government agencies. Otherchallenges include:

Short-term perspective. Returns on business advocacin trade polic must be considered within a long-termperspective. Industr leaders in developing countriesoften have a short-term view.

High risk. Returns on business advocac are more riskin developing countries due to political instabilit, lackof transparenc and lack of a participator approach totrade policmaking.

Resistance to change. Resistance to change is partl dueto the lack of awareness and knowledge of the benetsof change to the status quo. The process of globalizationcan eacerbate feelings of insecurit and threat.

Lack of economies of scale. The potential benetsof lobbing in trade polic tend to be lower for thedeveloping countr industries, especiall for small andmedium-sized enterprises (SMEs), due to the lack ofeconomies of scale.

The government needs political will and leadership toengage. A strong commitment and a conscious effort bthe political leadership and senior civil service ofcials areneeded to encourage consultative processes and drivetheir activities. Also critical is the will to reform. Without bothpublic and private champions investing in and driving theprocess, it is difcult to sustain public-private dialogue andachieve reforms.

In many cases, middle and lower level government ofcialsmust be sensitized as to the importance of engaging withthe private sector. As the host, government must establish

a forum where robust dialogue and knowledge sharing aresupported. Champions from both the public and the privatesectors need to drive the dialogue, promote the concept,


19/116

INTRODUCTION 7

devote time and effort and give public-private dialoguecredibilit, epertise and publicit.

Pre-requiSiteS fordialoGue

A number of pre-requisites are required for effectiveconsultative mechanisms.

There should be political will to engage in seriousconsultations. However, consultative mechanisms canhelp build political will.

Participants in the process should be able to makecredible commitments.

Reform objectives should be well dened and specic.

Internal processes and procedures should be transparentand participator.

There should be an independent and adequatelnanced secretariat to support the consultative process.

The consultative mechanism membership should beauthoritative and representative.

There should be follow-up procedures for monitoringagreements.

The consultative mechanism objectives and activitiesshould be realistic about what is achievable in thecountrs economic, political and social contet.

Bo 1 outlines an ecellent eample of public-privatecollaboration for eport success.

five country caSeS

The case studies in this book describe different methods andachievements of successful public-private dialogue.

In Barbados, the public and private sectors worked togetherto ensure the countr was able to secure better accessfor its tourism service providers and investors under theCARIFORUM-EU Economic Partnership Agreement (EPA).

In Ghana, public-private dialogue resulted in a public-privatepartnership and a highl successful initiative to integratecustoms services. This resulted in boosting Ghanas ratingsas a good place to do business and government ta revenues.

In Thailand, a business friendl, government-led industrialdevelopment strateg has resulted in a parts and componentssupplier network in the countr, which impressivel increasedlocal content in Thai-made cars.

The eport production hub in the State of Penang, Malasia,provides a valuable laborator for a stud of government

policies and global sourcing strategies of multinationalenterprises (MNEs) in determining developmental gains fromglobal production sharing.

To revive the countrs declining tetile industr, theGovernment of India introduced the Scheme for IntegratedTetile Parks (SITP), designed to strengthen infrastructuralfacilities in potential tetiles growth areas with activeparticipation of the private sector. With the SITP, the

Government envisages India securing a 7% share in theglobal tetiles trade b 2012.

These cases provide a range of successful eamples thataddress man of the underling concerns in laing thefoundations for successful trade. Readers can appl thelessons of these cases to their own contet.


20/116

INTRODUCTION8

* FMMs membership represents about 20% of the companies engaged in Malasias manufacturing sector. Generall, the are largecompanies that account for about 75% of countrs industrial output.

Bo 1: Public-private cooperation improves Malasias business environment

The Malaysian example showcases the benets of effectivepublic-private dialogue and cooperation.

The importance of trade in the Malasian econom madeit imperative for the Government to create a business-friendl environment. Recognizing the growing role of theprivate sector in eport-led economic growth, the MalasianGovernment decided it was crucial to view the private sectoras an important public sector partner to achieve economicgrowth and prosperit.

In Februar 1983, the Government introduced the MalasiaIncorporated concept to create a new and enhancedrelationship between the Government and the privatesector. This was an evolution over the previous sstem ofad hoc and informal consultations between the Government

and the business communit. The Malasia Incorporatedconcept institutionalized public-private sector collaboration.

The fundamental principle of Malasia Incorporated isthat the public and private sectors believe that the nationis a corporate entit, jointl owned b both sectors,and that both are working in pursuit of shared goals.The benet of this cooperation for the private sector isa higher level of prot leading to increased investmentand growth. The Governments interest in the success ofMalasian Incorporated includes generating emplomentopportunities, economic development and increasingrevenue, which fuels social and economic development.

The introduction of Malasia Incorporated has changedthe perception of a dichotom between the roles of thepublic and private sectors. The public sector, entrustedwith safeguarding public interest, has long emphasized itsregulator role over the conduct and activities of the privatesector. Under the Malasia Incorporated concept, the publicsector was required to redene its role in relation to businessactivities and to embark on new approaches to facilitate theprivate sectors role in driving economic development.

The Government established structural mechanismsand issued several directives to facilitate public-privatecooperation and consultation through:

Establishing Consultative Panels in each Ministr/Department/Ofce at federal, state and district levels;

Designating secretaries general, directors general,state secretaries, and district ofcers as chairs of theConsultative Panels, with membership comprisingrepresentatives from both the public and private sectors;

Organizing regular meetings and an Annual DialogueSessions with the private sector;

Identifing the Secretariat for the Consultative Panels ineach agency and designating an ofcial to liaise withmembers from the private sector;

Taking actions on matters discussed and decided uponat Consultative Panel meetings.

The terms of reference of the Consultative Panels establishedunder this initiative include:

Simplifing rules, regulations and procedures related tothe activities of the public sector;

Preparing guidebooks to facilitate understanding ofrules, regulations and procedures;

Transparent decision-making process and reducingdiscretionar powers;

The timel deliver of government services to the privatesector.

It took some time for government departments and agenciesto work closel with the private sector. This new approachwas not part of the work culture. Moreover, the polic wasnot well understood or valued. At the same time, it did notelicit the appropriate responses from both the public andprivate sectors. Participants were less frank and candid intheir engagement. However, with greater appreciation of theneed for close cooperation, the environment improved overthe ears.

Strong commitment and conscious efforts b the politicalleadership and senior civil service ofcials to encouragethe Consultative Panels to invigorate their activities have

substantiall contributed to effectivel implement MalasiaIncorporated. The urged civil servants to deliver highqualit services and to increase their interaction withthe private sector. This was complemented by specicmeasures to intensif training of the middle and lower levelcivil servants to enhance their understanding of the MalasiaIncorporated concept and to change their mindset andattitude. In addition, the planned, coordinated and coherentmanner in which the Government implemented the policcontributed to its success.

The private sector recognized the benets of this workingrelationship and strongl supported the initiative. The

Federation of Malasian Manufacturers (FMM*), anumbrella organization of the manufacturing sector, plaeda proactive role b providing critical feedback and inputsto the Government on polic as well as operational issues.

FMM has provided an effective platform for the privatesector for sectoral consensus building and networkingbased on consultation among its members. FMMsorganizational and nancial strength and the attention givento professional development of its staff members greatlcontributed to FMMs success in making maimum use ofthe forum provided b Malasia Incorporated.


21/116

INTRODUCTION 9

endnoteS

1. Unleashing Entrepreneurship (Commission on the Private Sector andDevelopment, UNDP, 2004). Available at: http://www.undp.org/cpsd/documents/report/english/fullreport.pdf.

2. D. W. te Velde, Effective state-business relations, industrial polic andwealth creation, in Effective State-Business Relations, Industrial Policy andEconomic Growth, (Overseas Development Institute, 2010).

3.Herzberg B. and A. Wright, The Public-Private Dialogue Handbook: Atoolkit for business environment reformers (World Bank, 2005).

4. Ibid.

5. Ibid.

6. N. Pinaud, Public-Private Dialogue in Developing Countries Opportunities and Risks (Organisation for Economic Co-operation andDevelopment, Development Centre Studies, 2007).

7. Ibid.

In Februar 2007 there was an important development in thepublic-private sector partnership consultative mechanism.The Government established the Special Taskforce toFacilitate Business (PEMUDAH) to carr the spirit ofMalasia Incorporated to a much higher level.

Reecting the close working relationship between the publicand private sectors, PEMUDAH is co-chaired b the chiefsecretar to the Government of Malasia and the pastpresident of the FMM. The concept of co-chairmanshipis different as public sector ofcials chaired previousforums. This reects an even stronger commitment bythe Government to engage the private sector as an equalpartner.

PEMUDAH has been assigned a monitoring responsibilitto ensure that reforms are sustained and embedded in thepublic deliver sstem. The PEMUDAH model is intended

to take public-private collaboration beond the level ofdialogues that often achieve no more than discussingissues of concern.

PEMUDAHs mandate includes simplifing rules, regulationsand procedures, and enhancing transparenc. However,it also includes discussing polic issues for improving theMalasian business environment. A Permanent Secretariatprovides back-up support and monitors the progress of

implementing Task Force decisions.

Since its inception, PEMUDAH has leveraged the enhancedpublic-private sector collaboration and successfullimplemented man initiatives and measures. Tradefacilitation is one such area in which notable progress hasbeen made over the past three decades to implementreforms in customs policies, legislation proceduresand practices. These have signicantly improved theoperating environment for business and boosted nationalcompetitiveness.

Source: D. Supperamaniam, Public-Private Sector Collaboration for Improving the Business Environment in Malasia (case stud for Businessand Trade Polic programme), International Trade Centre, 2010.


22/116

iStockphoto


23/116

chaPter i

business advocacy winsmarkets in barbadostourism services liberalization under thecaribbean-european union economicpartnership agreement

case study executive summary 12

a snapshot of tourism in barbados 13

business advocacy groups get organized 14

a better landscape for tourism services 18

a market access scorecard 19

conclusion 21


24/116

CHAPTER I BUSINESS ADVOCACy WINS MARKETS IN BARBADOS12

buSineSS advocacy winS

marketS in barbadoStouriSm ServiceS liberalization under thecaribbeaneuroPean union economic PartnerShiP

aGreement

caSe Study executiveSummary

This case stud describes how the private and public sectorsof Barbados worked together to ensure the countr wasable to secure better market access for its tourism serviceproviders and investors under the CARIFORUM-EU EPA.

CARIFORUM is the Caribbean Communit (CARICOM),comprised of 15 Caribbean Communit states, togetherwith the Dominican Republic. The Economic PartnershipAgreements (EPAs) between the European Union andAfrican, Caribbean and Pacic countries are trade promotion

agreements that stem from the 2000 Cotonou Agreement,and are tailor-made for specic regional circumstances.

In the EPA negotiations, Barbados achieved a signicantmeasure of success for the tourism sector. This case studgives public ofcials involved in EPA negotiations a valuableinsight into the value of partnership with the private sector.Private sector actors will better understand how the needs ofbusiness and of the sector can be brought to the table andield results.

The case stud also demonstrates the importance of public-private collaboration in preparing negotiating positions for

international trade negotiations, the processes for effectivedialogue and the specic role of the private sector. This casestud also provides an analsis of the business opportunitiesfor the Barbados tourism industr under the EPA.

The conclusion of the EPA between the CARIFORUMGroup of the African Caribbean Pacic (ACP)1 states andthe European Union represents enhanced and new accessopportunities in the EU market for CARIFORUM investors andservice providers in the tourism industr. Barbados should beone of the main beneciaries of these trade gains given thepredominance of tourism and tourism-related activities in itseconom and the qualit of its tourism-related infrastructure.

The EPAs treatment of tourism services is notable for itsdevelopment cooperation provisions in areas such ascapacit building for environmental management, developing

Internet-based marketing strategies for small and medium-

sized tourism enterprises, as well as upgrading nationalaccounts sstems to introduce tourism satellite accounts atthe regional and local level.

The negotiation of a free trade agreement between partnersof dramaticall different economic sizes and capabilitieswas no eas task. For success, the smaller negotiatingpartner Barbados needed several elements, including:

A technicall competent negotiating machiner;

A proactive government providing clear polic guidanceon negotiating strateg and positions;

Effective government communications with the private

sector;

Active private sector involvement based on asophisticated awareness of the implications of tradepolic for their businesses.

A ke lesson emerging from the EPA negotiations is thatthere is an increasingl important role for the private sectorin developing countries. Private sector actors are often bestplaced to identif potential eport opportunities, eistingbarriers and the means to capitalize on the opportunitiesopened up b trade pacts. A critical element in the negotiationprocess is ensuring there are avenues for constructiveengagement between the private sector and government tobest fashion market access requests and offers.

Private and public sector interaction was an essentialelement in ensuring that the countr was able to secure bettermarket access conditions for its tourism service providersand investors under the EPA than those afforded b theWorld Trade Organizations (WTO) General Agreement onTrade in Services (GATS).

The case stud documents the domestic tourism industrspositions, the interaction between stakeholders in thetourism industr and the Government of Barbados and howthat interaction helped shape the tourism-related provisions

of the EPA. The process involved both national interactionand regional dnamics. Important public-private interactionstook place at the regional level among actors such as the


25/116

CHAPTER I BUSINESS ADVOCACy WINS MARKETS IN BARBADOS 13

Caribbean Regional Negotiating Machiner (CRNM), theCaribbean Tourism Organization and the Caribbean Hoteland Tourism Association (CHTA).

The CRNM, as far back as 2003, had undertaken much

of the preparator work that enhanced the richnessof this interaction. The CRNM is the premier regionalbod with a technical competence in trade. Barbadosprivate sector representative agencies reconstituted theirresearch capabilities to meet the challenge of internationalnegotiations. Their preparator work included:

Commissioning a seminal stud that provided acomprehensive assessment of the issues involved intourism negotiations;2

Working with the CHTA and the Caribbean TourismOrganization to sensitize tourism stakeholders about thetrade issues through workshops within the region;

Addressing the CARICOM Ministers of Tourism and theCARICOM Council for Trade and Economic Development;

In some cases, facilitating increased contact and co-ordination between Ministries of Trade and Ministries ofTourism.

The EPA negotiations represented an opportunit for servicesuppliers in Barbados and the Caribbean to reap benetsnot achieved in the WTO, including:

Creating meaningful, innovative, market-opening rulesfor the sector;

Establishing a common understanding on issues facing

the sector, such as in the areas of standards and anti-competitive practices;

Creating mechanisms to make it easier for EU investorsto choose the Caribbean;

Strengthening the capacit of CARIFORUM operatorsto increase tourism eports and the industrscompetitiveness.

The success of the Barbados tourism stakeholderscampaign to secure new market access opportunities in theEU market can be attributed to:

Active engagement of the private sector in EPA

negotiations; Use of business support organizations to conve

positions to the Government and the regional authorities;

Commitment of Government and the private sector tohave a constructive and cooperative working relationshipthroughout the negotiations;

The abilit of negotiators to successfull pursue theinterests of private operators.

a SnaPShot of touriSm inbarbadoS

Tourism is a mainsta of Barbados econom and its mostimportant services eport.3 Barbados is one of the most

mature Caribbean tourism destinations. The countrstourism industry offers relatively diversied products,

including the long-sta visitor market and a growing cruiseship segment. Stakeholders include a wide variet ofservice suppliers ranging from the lower value-added end

to the premium end: car rental and coach operators, aircraftcatering, tour guides, travel agents and tour operators,dut-free retailers and a variet of businesses that derivesignicant revenues from the tourism industry, for example,

restaurants, retail shops, etc. Barbados has made signicant

strides in creating niche tourism markets such as events-focused cultural tourism, heritage tourism, sports tourismand destination weddings.

Barbados faces increasing global competition. In the region,Barbados faces erce competition from destinations such

as Meico, Cuba, the Dominican Republic and Jamaica.The countrs main challenge is to maintain a high-qualit

tourism product while adding value through the addition ofniche markets, such as health and wellness tourism, whichbuild on Barbados eisting capacit base. As Barbadoslargest tourism markets are the United Kingdom, the UnitedStates and Canada, the industr is particularl vulnerable toeconomic downturns in an of these countries.

recent induStry Performance

From 2001 to 2007, the industrs real growth rate averaged1.47%. This slow growth rate is eplained b the steepdeclines eperienced in 2001 and 2002 in the aftermath of

the 9/11 and 2005 terrorist attacks in the United States andthe United Kingdom and b modest rates of growth in 2006and 2007, following robust growth in 2003 and 2004 (seegure 2).

In 2007, Barbados received 1,189,291 tourist visits.4 Long-sta tourists accounted for approimatel 48.2% of this total.Long-stay tourist arrival gures were boosted by Barbados

hosting of some matches of the Cricket World Cup in April2007. This gure represents a 1.8 % increase in long-stay

tourist arrivals over 2006. Cruise tourism represents anincreasingl important segment of the tourism market,growing b 14.3% in 2007.5

The industr earned BDS$ 763.6 million (US$ 385.6 million)in 2007, contributing 13.5% of real GDP.6 Visitor ependiturein 2007 totalled BDS$ 2,400.2 million, an increase of 18.5%compared with BDS$ 1,955.2 million the previous ear.7 In2007, the tourism industr directl emploed an estimated14,000, approimatel 10.5% of the total labour force.8

The United Kingdom is the most important tourism marketfor Barbados, accounting for 38% of total long-sta touristarrivals in 2007.9 The growth in arrivals from other Europeancountries has been less than impressive. Arrivals fromEuropean destinations declined b 25.8% in 2006-2007.

Other major tourist markets such as the United States andCanada continue to grow, recording increases of 2.1% and7.7 %, respectivel over the same period.


26/116


buSineSS advocacy GrouPSGet orGanized

Prior to 2003, various business support organizationsmaintained a limited research capacit in trade and relatedgovernment policies. The private sector business supportorganizations initiated a rationalization process. Thisentailed carving out research capabilities from eistingbusiness support organizations and grouping them undera new entit the Barbados Private Sector Trade Team(PSTT). The PSTT was mandated to research, documentand promote private sector interests likel to be affectedin international trade negotiations.10 The main pillars of thePSTTs work include:

Evaluating the competitiveness of Barbadian businesses;

Assessing the impact of trade agreements; Identifing new opportunities arising from a progressivel

more liberal international trading environment.

The Barbados Hotel & Tourism Association (BHTA)represents the interests of the private sectors tourismstakeholders. It plaed a limited role in the overall EPAnegotiations, providing support to the PSTT and the regionalindustr association, the CHTA.11 The BHTA served as a kelink between the PSTT, the CHTA and tourism stakeholders.

The BHTA participated in PSTT tourism initiatives andattended meetings of the CRNMs Technical Working

Group on Services. The BHTA also used opportunitiessuch as the Commonwealth-sponsored private-publicsector consultations in 2004 to make presentations aimed

at sensitizing policmakers about the peculiarities of thetourism industry and to articulate specic market accessdemands for the EPA, the WTO and the now-abandonedFree Trade of the Americas Agreement.

The PSTT clearl viewed the EPA negotiations as anopportunit for its members to secure new accessopportunities for its members in the European market. In its2006 Information Paper, the PSTT stated:

Tourism stakeholders in Barbados and the

region have requested that CARIFORUM

negotiators in their formal discussions with

the EU stress the importance of the tourism

sector to the economies of the region. Tourism

stakeholders in the private sector will be

looking to the EPA to address some of thedifculties currently being experienced in the

tourism sector.

CARIFORUM countries expect the EPA to

provide signicant economic benets to the

Caribbean in terms of market access and

trade facilitation to enable mainly the small

service suppliers in the region to export for the

rst time and/or increase exports to the EU.12

The PSTTs activities included encouraging tourism

stakeholders to lobb for their interests and formulatingpositions and engaging in consultations with the Ministr ofForeign Trade.

Figure 2: Real growth rate of the tourism industry, 2001-2007

-8

-6

-4

-2

0

2

4

6

8

10

12

2001 2002 2003 2004 2005 2006 2007%c

hange

Source: Based on data from table I.2, Trade Policy Review: Barbados, World Trade Organization, 2008.


27/116


enGaGinG in Stakeholder advocacy

The PSTT encouraged tourism stakeholders to engage in

advocac to secure their interests. It elaborated a three-

phase strategy to heighten the prole of tourism issues.13

The rst phase entailed coordinating public and private

sectors at the national level. This called for increased

private sector involvement in the decision-makingprocess on trade liberalization issues. It placed the onuson the private sector to understand the issues and conve

its needs to policmakers and national negotiators.

The second phase involved organizing the publicand private sectors at the regional level b creating

opportunities for dialogue at major regional tourismconferences.

The third phase was organizing regional stakeholdersand negotiators at the international level and lobbing forthe tourism industr in the multilateral arena.

collaboratinG and formulatinGPoSitionS

The PSTT was an important plaer in formulating positionsfor the tourism industr. Together with BHTA, the PSTT

facilitated the process of identifing the tourism sectorsoffensive and defensive interests through a number of focus

groups in late 2004. Focus group participants included ketourism stakeholders and a representative from the Ministrof Foreign Trade.

The focus groups aimed at formulating private sectorpositions on tourism issues for the negotiations with the EU,

as well as for upcoming negotiations with Canada and theUnited States. Sub-sectors that were the subject of these

eercises included tour operators, tour guides and travelagents; attraction and recreation services;14 aircraft catering

services; car and coach rental services; and dut-freeretail services. The stakeholders took an epansive view ofthe tourism industr. Their focus groups and subsequent

requests included services not classied as tourism

services under Central Product Classication (CPC), the

worldwide product classication system of goods and

services published b the United Nations.

The focus group discussions provided the basis for thenational tourism stakeholders market access requeststo the EU. These requests were formall submitted b the

PSTT to the Ministr of Foreign Trade to incorporate intoBarbados collective requests and offers (see bo 2). The

PSTT submission highlighted areas in which Barbadianservice providers epressed interest in gaining enhanced

access to the European market and requested removal ofspecic barriers to tourism services exports. PSTT sought

market access to the EU in the above-mentioned sectors.

the Government reactS favourably

The Foreign Trade Division of the Ministr of Foreign Affairsand Foreign Trade appeared to be satised with the private

sectors initiatives on tourism trade issues. The Ministrfound that the business support organizations representingthe interests of tourism stakeholders were well informed andhad a clear idea of the industrs defensive and offensiveinterests.

The PSTTs devotion of signicant time and resources wasreected in well-researched and structured submissions.As a preliminar step, the Foreign Trade Division in thecontet of Barbados EPA initial offers eamined the PSTTssubmission. CARIFORUMs EPA offer was prepared on thebasis of the CARIFORUM states WTO offers (see bo 2 andtable 2).

While the PSTTs requests listed in bo 2 appear somewhatdifferent from those of CARIFORUM described in table 2, thereis actuall a high level of consonance between the two. ThePSTTs request to remove all limitations to the establishmentof commercial presence is equivalent to CARIFORUMsrequest for the Czech Republic and Poland to remove theirrestrictions as these were the onl two European countriesthat remained unbound in the EUs conditional revised offerat the WTO. One difference, however, is that CARIFORUMsrequest did not heed the PSTTs request for the removal ofrestrictions on the establishment of commercial presencefor tour guides services.

the role of the caribbean hotel andtouriSm aSSociation

Since 1962, the CHTA, sometimes referred to as theCaribbean Hotel Association, has operated as anindependent, not-for-prot organization. The CHTA standsout in terms of its active engagement in the negotiationprocess and its role in coordinating the regions tourismsector. The pivotal role plaed b the CHTA is eplained bthe national business support organizations condencethat CHTA accurately reected its interests and was able to

effectivel articulate its demands.

The Barbados tourism industrs perception that theCHTA was a champion of its interests was also rooted inthe fact that the PSTTs lead consultant on tourism issueswas recruited to the CHTA as its Industr and AdvocacManager for the EPA negotiations. This contributed toa health cross-fertilization of ideas and strong lines ofcommunication among the BHTA, the PSTT and the CHTA.The CHTAs involvement in the EPA negotiations included:

Submitting a position paper in 2005 and a rst draft of adeclaration/EPA Anne on tourism in 2006;

Encouraging the active engagement of its membership inthe negotiation process b emphasizing the importanceof trade issues for the industr;


28/116


Bo 2: Highlights of the private sector trade teams market access requests on tourism

Travel agents, tour guides and tour operators

Travel agents

Removal of all restrictions on cross-border suppl

Removal of all restrictions on the establishment of commercial presence

Removal of restrictions on the movement of managers and ke personnel of CARIFORUM operations as well asindependent self-emploed travel agents

Tour operators

Removal of all restrictions on cross-border suppl


Removal of restrictions on the movement of managers and ke personnel of CARIFORUM operations as well asindependent self-emploed tour operator professionals

Tour guides


Removal of restrictions on the movement of managers and ke personnel of CARIFORUM operations and provide formovement of CARIFORUM tour guides

Lodging, food and beverage services

Lodging services


Removal of restrictions on the movement of managers and ke personnel

Food serving services

Removal of all restrictions on the cross-border suppl of catering services, including aircraft catering operations

Removal of all restrictions on the establishment of commercial presence, including aircraft catering operations Removal of restrictions on the movement of managers and ke personnel

Source: Submission of the Private Sector Trade Team to the Foreign Trade Division, 25 August 2005.

Bo 3: WTO modes of suppl

In terms of market access, the WTO distinguishes between

the following four modes of services suppl:

Cross-border supply (Mode 1) covers services owsfrom one customs territor into another. Tpical eamplesare services transmitted via telecommunications or mail.

Consumption abroad (Mode 2) refers to situationswhere consumers move into another customs territor toobtain services, as predominantl the case in the tourismsector.

Commercial presence (Mode 3) implies that a service

supplier establishes a territorial presence in anothercustoms territor to provide a service, as for eample inthe case of hotel chains.

Presence of natural persons (Mode 4) consists ofpersons entering a foreign customs territor to suppla service, as independent self-emploed tour operatorsma do on occasion.


29/116


Polling members to gauge their views on particularissues;

Participating in the Caribbean Regional Negotiating

Machiner Technical Working Groups in Barbados and

Jamaica.

EPA tourism negotiations hit a low point in late 2007.15 Thisdeadlock seems to have been caused b opposing views on

the necessit of including separate and distinct disciplinesfor the tourism industr within the EPA. While CARIFORUM

was rmly committed to including such disciplines, EU

negotiators appeared to deem them unnecessar. The

CHTA waged a public relations campaign highlightingthe importance of the tourism industr to the region and

generating some negative press for the EU, especiall inlight of the signicant asymmetries in the size and power of

the two regions.

The CHTA considers its campaign as one of the factorscontributing to the modication of the EUs stance on

tourism issues. While the deadlock was eventuall resolvedat the level of Chief Negotiators, this anecdote illustrates

that there is a unique role for private sector actors innegotiations. Neither the CARIFORUM governments nor the

CRNM could have orchestrated such a media campaignwithout prejudicing the negotiations.

The CHTAs 2005 position paper articulated market access-related demands in three areas:

Negotiation of a mutual recognition agreement (MRA)with the EU to recognize and accept tourism qualications

and credentialing programmes.

Enhancement of access to the EU for the temporarentr of tourism professionals of all levels, as well as

for Caribbean hospitalit students seeking access totemporar work eperience (Mode 4). Such access was

also sought for skilled and semi-skilled workers in the

culinar, food and beverage sub-sector.

Improved access to the EU market through cross-border suppl (Mode 1) of tourism services through

a review of EU legislation and standards applicable to

Caribbean hoteliers while cooperating with Europeantour operators.19

Mode 1 encompasses direct marketing of CARIFORUM-based hotel services via their own Internet platformsand indirect marketing through Computer ReservationSstems, such as Amadeus, Sabre, Galileo andWorldspan. It also includes online booking engines and

Internet portals, including Hotels.com, Epedia andTravelocit.

Currentl, the number of bookings made directl withCaribbean hotels is small. Computer ReservationSstems, online booking engines and Internet portalsare the main distribution channels for the tourismproducts. These are controlled b a few big internationalcompanies. As a result, under Mode 1, CARIFORUMhotel service providers have primaril indirect accessto EU tourist markets. Actual access to the EU marketma be restricted b the requirements of the few kedistributors.

Obtaining a Mode 1 commitment for hotels would meanthat the EU would not maintain an market access barriersto CARIFORUM operators selling their services directl orindirectl in the EU market via electronic media. Giventhe marketing trend described above, the immediateconsequence would be to remove barriers that ma arisebecause of the dominance of the international bookingagencies.

With a Mode 1 commitment, there would be a legal basison which to challenge barriers to marketing CARIFORUMtourism services. This should be considered inconjunction with the anti-competitive provisions in theEPA, which address the question of global suppliers thathave the capacit to materiall affect the CARIFORUMoperators abilit to participate in the market. This marketaccess plus the anti-competition provisions wouldprovide CARIFORUM with a stronger basis to competeagainst unfair practices such as eclusivit clauses.

In the absence of a commitment,20 there is no legal basisfor contesting Mode 1 barriers to market access. Hence,it is more difcult to make inroads into the market on thebasis of access onl via CARIFORUMs own Internetmarketing.

It is important to note that the EU Package Travel

Directive applies to the CARIFORUM hotels, whetherthe market their services directl or indirectl to the EU

Table 2: Main elements of the CARIFORUM access requests on tourism

Sector Request to EU Member States by mode of supply

Hotels and restaurants including catering services CPC641-64316

Mode 3: Remove limitations for Czech Republic and Poland forCPC 643

Remove national treatment restriction for the Economic NeedsTest in Ital for CARIFORUM providers

Mode 4: Remove limitations for all Member States

Travel agencies and tour operators services CPC 7471 17 Modes 1, 3, 4: Remove limitations for all Member States

Tourist guides services Mode 4: Remove limitations for all Member States18

Source: CRNM, CARIFORUM Request to the European Communities.


30/116


market. As indicated, the wa in which some EU MemberStates have implemented the Directive appears to havebeen a barrier to Mode 1 access. In getting a Mode 1commitment, CARIFORUM states ma put the onus onthe EU Member States to ensure that the implementation

of the Directive does not create a barrier to Mode 1access.

These demands, along with the other concerns of thetourism stakeholders, were also incorporated into the CHTA/Caribbean Tourism Organizations draft tet on tourism.

a better landScaPe fortouriSm ServiceS

The conclusion of the EPA between CARIFORUM and theEU represents enhanced and new access opportunitiesin the EU market for CARIFORUM investors and serviceproviders in the tourism industr. Barbados stands to beamong the main beneciaries of these trade gains, giventhe predominance of tourism and tourism-related activitiesin its econom and the qualit of its related infrastructure.

The Barbados private and public sector interaction wasan essential element in ensuring that the countr was ableto secure better market access conditions for its tourismservice providers and investors under the EPA than thoseafforded b the World Trade Organizations GATS.

Both national interaction and regional dnamics took place.Regional actors included the CRNM, the Caribbean Tourism

Organization and the CHTA.

market acceSS GainS

In the EPA negotiations that concluded in December 2007,the EU made a number of commitments in the tourism andtravel-related services sector, namel in regard to hotelsand restaurants, catering services, travel agencies, touroperators and tourist guide services (see table 3). Somecommitments were made for spa services as well as for otherservices not classied as tourism services, but nonethelessof interest to Barbados tourism services providers.21

The market access gains are discussed below in terms ofthe four specic modes of supplying tourism services.22

The areas covered b the EPA are shared competencesbetween the EU and the Member States. As a result, notall areas have been liberalized homogenousl in the EPA.A number of EU Member States opted out with regard tospecic supply modes in certain sectors.

croSS-border SuPPly andconSumPtion abroad of ServiceS(modeS 1 and 2)

The EU Member States were liberal in their commitments onthe provision of catering services through Mode 1, removing

all market access restrictions. However, a closer inspection ofthe EUs Mode 1 commitments suggests this gain ma be oflimited value given the practical difculty of supplying cateringservices via Mode 1.23 The EUs commitments for hotelsand restaurants reect a far more restricted access regime.

Estonia, Finland and Hungar have removed their restrictions;the remaining 24 EU Member States remain unbound.

CARIFORUM suppliers secured additional market access forthe Mode 1 cross-border suppl of travel agenc and touroperator services, with onl Bulgaria and Hungar optingto maintain their restrictions. For tourist guide services, 17Member States removed their market access limitations, whileBulgaria, Cprus, the Czech Republic, Hungar, Ital, Lithuania,Malta, Poland, Slovakia and Slovenia remain uncommitted.

The EU places no limitations on Mode 2 trade (consumptionabroad) for an of the three tourism categories or for spa

services. As a result, Europeans can use these tourism andspa services freel in CARIFORUM countries. However, suchcommitments are of limited value as there were no barriersto start with. CARIFORUM had sought to add value to thesecommitments b requesting the portabilit of state fundedmedical insurance benets so that the costs of medicallymandated spa treatments are eligible for reimbursement forEU citizens. However, this request met with little success as EUnegotiators considered such insurance schemes to lie beondthe scope of the EPA.

commercial PreSence (mode 3)

The EU provided substantial market access for establishingCARIFORUM commercial presence in tourism services.For hotel, restaurant and catering services, all EU MemberStates ecept Bulgaria and Ital have no restrictions oncommercial presence. Bulgaria requires incorporation andItal imposes economic needs tests.

For travel agenc and tour operator services, onl Bulgariaand Portugal maintain limitations requiring incorporation ormaintenance of the rms corporate base in the host country.There are no limitations on commercial presence in an EUMember State for tourist guides services. In addition, there

are no restrictions on spa services.

temPorary PreSence of naturalPerSonS for buSineSS PurPoSeS(mode 4)

The EU has committed to allowing investors to engage kepersonnel and graduate trainees for ever service sectorliberalized under the EPA, subject to some country speciclimitations. The temporar entr and sta of ke personneland graduate trainees will be for up to three ears for intra-corporate transfers, 90 das in an 12-month period for

business visitors, and one ear for graduate trainees. OnlBulgaria has maintained limitations in these categories. InBulgaria, the number of foreign managers cannot eceed


31/116


that of local managers where the state/municipal share inequit in a Bulgarian compan is greater than 50%.

With respect to tour guides services, 15 Member Statesremoved their limitations to the movement of theseprofessionals. The other 12 Member States have maintainednationalit requirements that nullif the partial accessotherwise granted. Nationalit requirements also appl toke personnel and graduate trainees across the EU for spaservices.

As regards commitments on contractual service suppliers,the EU remains unbound for hotel, restaurant and cateringservices as well as for spa services. The EU was more liberalfor travel agenc services: 14 Member States scheduled nolimitations for this categor of professionals, 12 MemberStates applied economic needs test and Ireland remainedunbound.

A similar picture emerges for tour operator services includingtour managers, although Ireland has made a commitmentto allow contractual service suppliers entr solel for tourmanagers. For tour guides services, there is a much lower

level of commitment. Onl Sweden agreed to remove itsmarket access limitations, whereas 21 Member Statesimpose economic needs tests and the remaining ve havenot undertaken an commitments. The EU did not make anoffer on the temporar entr of independent professionals inan of the three tourism sub-sectors.

a market acceSSScorecard

commitmentS vS demandS

Comparing the PSTTs requests to the results in the EPA, itis clear that Barbados tourism stakeholders secured muchof what the sought to achieve. 24

For catering, travel agenc, tour operator and tour guideservices, the EU Member States provided a signicant levelof Mode 1 access with the level of commitments rangingfrom as high as all 27 Members States to a low of 17.25 Thiswas clearl a favourable outcome for Barbados serviceproviders. The PSTT had not requested an Mode 1 marketaccess commitments for hotel services, as these were notconsidered to be technicall or commerciall feasible. Withrespect to food serving services, the PSTTs request waslimited to catering services (CPC 6423). As a result, the lack

of EU commitments for restaurant services is presumablnot problematic.

In terms of the commercial presence commitments,the EU was ver liberal with 25 Member States makingcommitments in all of the scheduled tourism sub-sectors aswell as for spa services. Barbadian tourism service providerscan be relativel content on this score. While the PSTT hadincluded aircraft catering in its general catering servicesrequest, such a service is properly classied as a serviceauiliar to air transport services.26 In its commitments in thelatter sub-sector, the EU scheduled a reservation limitingcategories of activities to the size of the airport, stipulating

that the number of providers in each airport can be limiteddue to space constraints, but the have to be at least two tomaintain some competition. In addition, Bulgaria imposedan incorporation requirement. From the PSTTs perspective,such access, even if limited, is a positive outcome.

As measured against its requests, Barbados gainedsignicant market access for key personnel and graduatetrainees in the hotel, restaurant and catering servicessectors, as well as travel agenc and tour operator services,with 26 Member States making full commitments; Bulgariascheduled a partial commitment. In terms of the gains oncontractual service suppliers, the PSTT onl requested

that the EU allow temporar entr of tour guides. Therewas some measure of success as Sweden full opened its

Table 3: Highlights Tourism market access commitments to CARIFORUM in the EPA

Sub-sector

EPA commitments(Number of EU Member States)

Full Partial Unbound

Sub-sector modes Sub-sector modes Sub-sector modes1 2 3 4a 4b 1 2 3 4a 4b 1 2 2 4a 4b

Hotels and restaurants 3 27 25 26 0 0 0 2 1 0 24 0 0 0 27

Catering 27 27 25 26 0 0 0 2 1 0 0 0 0 0 27

Travel agencies 25 27 25 26 14 0 0 2 1 12 2 0 0 0 1

Tour operators services(Including tour managers)

25 27 25 26 14 0 0 2 1 12 2 0 0 0 1*

Tourist guides services 17 27 27 15 1 0 0 0 12 (=0) 21 10 0 0 0 5

Spa services 0 27 27 0 0 0 0 0 27 (=0) 0 27 0 0 0 27

Source: Anne IV.A, IV.B, IV.C and IV.D of the CARIFORUM-EU EPA.Eplanator Notes: 4a Ke Personnel and Graduate Trainees; 4b Contract Service Suppliers (CSS); (=0) Partial access negated bnationalit requirement; * Ireland is unbound ecept for tour managers.


32/116


market while 21 Member States made entr subject to aneconomic needs test.

Particularly useful were the signicant gains made for entryof travel agenc and tour operator contractual service

suppliers. These gains should not be underestimatedbecause market access provides CARIFORUM servicesuppliers the opportunit to compete with verticallintegrated suppliers in the European market.

On the question of enhanced Mode 4 access, especiall asit relates to profes

Documents

Cases Studies English