GDN Global Network New Delhi, India 29 January 2004

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GDN Global NetworkNew Delhi, India29 January
2004

• Trade Reforms in the 21st Century
• Challenge for Pacific Island Countries

Presentation by Vili Caniogo Trade and
Investment Division Pacific Islands Forum
Secretariat Suva, FIJI
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Pacific Island Forum

• Cook Islands
• Fiji
• Federated States of Micronesia
• Kiribati
• Marshall Islands
• Niue
• Nauru

• 8. Palau
• 9. Papua New Guinea
• 10. Samoa
• 11. Solomon Islands
• 12. Tuvalu
• 13. Tonga
• 14. Vanuatu

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Background

• 1. Economic Performance of Pacific Island
  Countries (PICs) -
• Not only low, inconsistent growth (0.8-1.1
  2000-02)but has also fallen over last 10 yrs by
  about 1
• Is lower than other developing countries 3
  (2000-02)
• Lower than similar sized island economies
• Mauritius and Maldives (3-4 since 1994)
• 2.  WTO Multilateral Trade Regime
• REMOVAL OF TRADE PREFERENCES ENJOYED BY PICs

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Discussion Points

• 1 How does the removal of a protectionist
  environment affect PICs?
• 2 As rule takers, how has the Pacific
  responded to changes in the multilateral trade
  system?
• 3 What are the challenges that face PICs as they
  face the seemingly onerous task of lifting the
  performances of their economies in the face of a
  rapidly changing trade environment?

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Characteristics of PICs

• Can be categorized into 3 groups
• Gp 1 PNG - vast natural resources
• - Largest country in
  Pacific
• and Caribbeans
  incl. NZ
• Gp 2 Fiji, Sol - far less resources than PNG,
• Samoa, Vanuatu some export industries
  though
• Tonga apart from fish
• Gp3 Tuvalu, FSM - very small/no export base
• Nauru, Kiribati, Cooks except fisheries
• Palau, Marshalls, Niue

Exports
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1 How does the removal of a protectionist
environment affect PICs?

• 2 Agreements
• Trade data available to date
• Agreement Exporters
• 1. Cotonou/LOME EU and PICs Fiji, PNG,
  Samoa, .
  Tonga, Sol?
• 2. SPARTECA ANZ and PICs Fiji

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2 How has the Pacific responded to the global
pursuit of a free, open market?

• AStepping Stone Approach to global integration
• (i) Regional trade Agreements
• PICTA - free trade agreement (FTA) amongst the 14
  FICs
• FTA implemented over 8 yrs (FICs) and 10 yrs SIS
  LDCs (6 SIS and 5 LDCs)
• will expand domestic market (regional market
  of 6 million people) will stimulate domestic
  production, improve competitiveness etc.
• PACER - trade and economic co-operation for all
  Forum Members - assistance to trade facilitation
  to FICs
• envisages Forum-wide integration - FTA
  negotiations to start 8 years after PICTA enters
  into force or earlier
• Also PIASA endorsed

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Strategy contd

• PICTA / PACER contd PICTA a small step (3 of
  FIC trade) in preparation for larger step (future
  FTA with ANZ) under PACER and under EPA with EU.
  FTA with ANZ will also require flexible RTA rules
  in WTO.
• PICTA in force 13 April 2003, PACER - 3 October
  2002
• (ii) Multilateral trade issues (WTO)
• 3 PICS are WTO, PNG, Fiji and Solomons Another 3
  in process of acceding (Samoa, Tonga and Vanuatu)
• collaborative approach with other small states
  and other org like CARICOM, Indian Ocean Comm and
  Comsec
• Small Economies Work Program reflecting S D

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Strategy contd

• (iii) Cotonou Agreement(EU)
• Need to negotiate WTO compatible Agreements
• 2 phase approach taken Phase 1 on common issues
  to the ACP began in Sep 2002
• Phase 2 will be regional specific to begin
  sometime in Q3, 2004
• Participatory approach involving private sector
  and NGOs

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3 What are the challenges that face PICs as they
face the seemingly onerous task of lifting the
performances of their economies in the face of a
rapidly changing trade environment?

• 1 Building on Participatory approach
• Mainstreaming?
• 2 Managing Social Impact of FTAs
• Inevitable some industries may close/downsize
  under PICTA

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Challenges contd

• 3 Fiscal Reforms
• prepare for extended FTAs
• Part of overall reform improve fiscal mgmt
• 4 Governance
• Good governance also impt to pace of trade
  reforms
• 5 S D treatment emphasis impt trade policy
• Some forms of assistance still needed. Exports
  also fiscal assistance

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Challenges contd

• 6 People/Capacity
• Perhaps the greatest challenge
• Capacity constraints at all levels policy,
  implementation
• PICS are at the entry of their path to wider
  integration

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CONCLUSION

• 1 Move towards free market has risks for PICs
• Subsidies- at least some PICs able to enter a
  large, distant market
• For others, shows the acute disadvantage of PICs
• 2 Stepping Stone approach to prepare for the
  cold shower ahead
• 3 SD vital level the playing field

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SOUTH PACIFIC