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EU enlargement as a stimulus for tourism

By: EBR - Posted: Monday, October 11, 2004

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The enlargement of the European Union, will help create a "more complete and coherent European tourism industry, which should be recognized in the future European Constitution" according to the World Tourism Organization.

"With the fall of political borders and increased awareness of tourism products in the new Members of the 'EU family', we may expect an increase in East-Western European tourism flows and vice-versa," says the WTO Secretary-General Francesco Frangialli. "The new countries are not just destinations, but tourism-generating markets as well."

Welcoming the enlargement as a fresh stimulus for tourism, he points out that the recent success of countries such as Croatia and Bulgaria has been largely due to holidaymakers arriving from EU newcomers like Poland, Hungary and the Czech Republic.

However, while EU programmes to aid economic development in these countries already contain "significant tourism elements", the lack of a central strategic vision on tourism policy continues to hinder the industry.
WTO has suggested the inclusion of shared competence between the Union and its member States in tourism matters in the proposed EU Constitution. "While the outcome is uncertain, the reality remains and cannot be ignored. All existing community policies have very powerful effects on tourism destinations, and this will only be accentuated with enlargement."

Mr. Frangialli explains: "The rationale behind the enlargement of the EU is to create a broad, free, prosperous and peaceful Europe. The difficulties of adapting to external shocks at global level, such as acts of terrorism, show us once again how important peace and political stability are for tourism."
EU policy of liberalizing internal trade, the harmonization of competition rules, and the elimination of non-tariff barriers to information and consumer protection, will all aid tourism. "Increased competition stimulates growth, productivity and ultimately welfare, and the winners in tourism will be those countries with the most tourism-relevant resources, skills and networks that succeed in creating new potential and exploiting it."

The introduction of the euro means devaluations are no longer possible for member States of the European Monetary Union. To overcome external shocks and falling demand, countries have only two options - to increase productivity or decrease their costs. "A sector like tourism must improve its productivity to be competitive on the global tourism markets and in the capital and labour markets. It has to adapt its structures and try to reduce the risks associated with volatile demand," says Mr Frangialli.

Good air links will be important for the new member countries. "The liberalization of civil aviation is positive for consumers and for tourism as an industry. It has enabled "low-cost carriers" to enter the market, forcing the major airlines to adapt their structures and reduce costs."
Tourism's ability to redistribute labour and income to less developed areas will depend on stakeholders having the will to invest, which can mean state support is needed to stimulate the private sector. "Promoting such development is in the public interest when there is a lack of local initiative to develop the growth potential."

Structural funds from the EU, for aiding rural areas or the conversion of former industrial regions, has already helped existing members, particularly in southern Europe where monuments have been renovated, new infrastructure built, and programmes carried out to upgrade cultural assets.
To improve the tourism product, the private sector itself needs to become more competitive and productive. But the state will still have a role to play in improving the framework. "It must lead the way, establishing a link between integration at European level and decentralization at local level." Other areas where greater European integration can benefit tourism are through EU initiatives in fields such as education, culture, research, the environment, and new technologies.

WTO foresees good prospects for the leading cultural cities of Central Europe, such as Prague, Budapest, Krakow and Ljubljana, which will become even more popular with international visitors, especially for short breaks.
The new members also have substantial potential in rural tourism, as do the next group of countries waiting to join the Union, with many of their destinations based on a large agricultural population that conserves crafts and traditions.

Of the ten countries joining the EU on 1 May - Estonia, Lithuania, Latvia, Poland, Czech Republic, Slovakia, Hungary, Slovenia, Malta and Cyprus - all are Members of WTO, with exception of Latvia, which will join in 2005, and Estonia. The European Commission estimates that tourism accounts directly for five per cent of the EU's total GDP, and represents 2.2 million enterprises and 7.7 million jobs.

"The ten new members are putting great hopes in tourism," explained Mr. Frangialli, stating that "WTO will continue to help them adapt to the new circumstances, in which we are looking forward to continuing good cooperation with the EU". "In this context it is important that tourism remains a competence of the EU and is mentioned in its Constitution. By omitting it, Europe risks losing ground and with it the transfer of wealth and jobs to determined competitors around the world. The future of European tourism depends on the level of awareness of Europe's political leaders with regard to the importance that they are willing to give to this sector," concluded Mr. Frangialli.

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