This, the first Review of the Maldives, has enabled Members to obtain
a much better understanding of its trade regime. The positive and
constructive comments raised during this Review by Members and the
discussant together with the responses from the Maldivian delegation
contributed to what I feel has been a very successful collective
consideration of the Maldives' trade policies and measures.
commended the Maldives for its impressive growth and success in
improving general living standards. Inflation and unemployment are
relatively low, and steady growth since 1980 has lifted the Maldives
to a lower middle income country level with per capita income of over
US$2,000. This has been achieved despite the economic and development
challenges facing the Maldives, a small island developing economy.
These include a narrow production base heavily reliant on tourism and
fishing, vulnerability to external developments, and a small and
scattered population over many islands. Members supported the
Maldives' ambitious plans for a more diversified export-oriented
economy and sought clarifications on the objective of becoming a ôregional
free trade hubö by 2020.
were highly supportive of the Maldives' trade and economic policies,
and efforts to meet its WTO commitments. They appreciated the heavy
demands this placed on its stretched administrative capacities and
encouraged the Maldives to continue with these efforts. Members urged
the Maldives to pass legislation implementing WTO Agreements and
revised trade and investment rules. Members felt that the
macro-economy had been well managed, although recent fiscal pressures
needed to be addressed. The authorities are considering introducing an
efficient direct tax system to broaden the internal tax base and
thereby reduce the heavy reliance on tariff revenue; such a reform by
easing fiscal pressures could also facilitate further tariff
Members felt that the Maldives' trade and investment regimes were
relatively open, transparency needed to be improved. Tariffs are the
main trade policy instrument. Members urged the Maldives to quickly
rectify those cases where applied rates exceeded bound levels, and to
reduce the significant gap between bound and applied duties.
Non-tariff barriers are few; import licensing is mainly automatic and
import quotas apply only to rice, flour and sugar.
to privatise and restructure state owned enterprises to improve
efficiency and facilitate greater private sector involvement were
welcomed by Members. They encouraged the deregulation of key services,
in particular, the intended abolition of the basic telecommunications
monopoly in 2008, to improve the economy's efficiency.
graduation is a major challenge for the Maldives. Members were
sympathetic to the possible implications this may have on its economic
performance, especially by the loss of significant EU tariff
preferences on fish exports. Several Members agreed with the Maldives
that the sudden withdrawal of such preferential treatment upon
graduation could retard its development, and believed that any such
graduation needed to consider factors other than income levels,
including some 40% of the population still below the poverty line and
vulnerability to external shocks.
sectoral issues, Members noted recent efforts to end the export
monopoly on tuna and sought details on the policy challenges in the
fisheries sector, including the current fish export licensing scheme.
While lease periods for island resorts had been increased, the
conditions attached to the new 50-year lease were rather restrictive.
also sought clarification on several specific issues, including:
reforms, including greater reliance on consumption taxes;
investment requirements, including the proposed revised
legislation, and investment incentives;
trade initiatives, including formation of SAFTA;
of unilateral preferential arrangements;
of WTO-consistent intellectual property legislation;
and phytosanitary arrangements;
valuation and use of minimum prices;
to introduce legislation on contingency remedies; and
expressed their appreciation of the oral and written responses
provided by the Maldivian delegation. They looked forward to receiving
the written answers to outstanding questions.
concludes our Review of the Maldives. It has highlighted the
commitment of the Maldivian authorities to the WTO and its efforts to
maintain a relatively open economy, despite its developmental
challenges. I would encourage the Maldives to continue these efforts,
and to focus on domestic policy reforms to address the supply side
constraints that limit the economy's diversification and compound its
vulnerability to external developments. I would also urge that Members
play their part by extending greater non-discriminatory market access
to the Maldives and providing sufficient well targeted technical
assistance for it to fully integrate into the multilateral trading