10 April 1997
POLICY REVIEW BODY: REVIEW OF FIJI
TPRB'S EVALUATION Back to top
The Trade Policy Review Body
of the World Trade Organization (WTO) concluded its first review of Fiji's trade policies
on 9 and 10 April 1996. The text of the Chairperson's concluding remarks is attached as a
summary of the salient points which emerged during the two-day discussion.
The review enables the TPRB
to conduct a collective examination of the full range of trade policies and practices of
each WTO member country at regular periodic intervals to monitor significant trends and
developments which may have an impact on the global trading system.
The review is based on two
reports which are prepared respectively by the WTO Secretariat and the government under
review and which cover all aspects of the country's trade policies, including: its
domestic laws and regulations; the institutional framework; bilateral, regional and other
preferential agreements; the wider economic needs and the external environment.
A record of the discussions
and the Chairperson's summing-up, together with these two reports, will be published in
due course as the complete trade policy review of Fiji and will be available from the WTO
Secretariat, Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.
Since December 1989, the
following reports have been completed: Argentina
(1992), Australia (1989 & 1994), Austria (1992), Bangladesh (1992), Bolivia (1993),
Brazil (1992 & 1996), Cameroon (1995), Canada (1990, 1992, 1994 & 1996), Chile
(1991), Colombia (1990 & 1996), Costa Rica (1995), Côte d'Ivoire (1995), the Czech
Republic (1996), the Dominican Republic (1996), Egypt (1992), El Salvador (1996), the
European Communities (1991, 1993 & 1995), Fiji (1996), Finland (1992), Ghana (1992),
Hong Kong (1990 & 1994), Hungary (1991), Iceland (1994), India (1993), Indonesia (1991
and 1994), Israel (1994), Japan (1990, 1992 & 1995), Kenya (1993), Korea, Rep. of
(1992 & 1996), Macau (1994), Malaysia (1993), Mauritius (1995), Mexico (1993), Morocco
(1989 & 1996), New Zealand (1990 & 1996), Nigeria (1991), Norway (1991 &
1996), Pakistan (1995), Peru (1994), the Philippines (1993), Poland (1993), Romania
(1992), Senegal (1994), Singapore (1992 & 1996), Slovak Republic (1995), South Africa
(1993), Sri Lanka (1995), Sweden (1990 & 1994), Switzerland (1991 & 1996),
Thailand (1991 & 1995), Tunisia (1994), Turkey (1994), the United States (1989, 1992,
1994 & 1996), Uganda (1995), Uruguay (1992), Venezuela (1996), Zambia (1996) and
TRADE POLICY REVIEW BODY: REVIEW OF
CONCLUDING REMARKS BY THE CHAIRPERSON Back
Over the past two days, the
Trade Policy Review Body has conducted the first review of Fiji's trade policies and
practices. These remarks, made on my own responsibility, are intended to summarize the
salient points of the discussion; they do not substitute for the Body's collective
evaluation and appreciation, which will be reflected in the minutes of the meeting.
The discussion developed
under three main themes: (i) macroeconomic and structural questions; (ii) general trade
policy questions; and (iii) other specific areas of concern.
In addition to questions
raised during the meeting, several participants submitted a number of questions in
writing. The representative of Fiji provided extensive replies to the questions and also
undertook to provide further details in writing concerning specific issues.
Macroeconomic and structural questions
Members highlighted Fiji's
relatively slow economic growth in recent years and the challenge to Fiji in achieving
more rapid, sustainable development. In this connection, questions were raised concerning
the fiscal balance; progress in public enterprise reforms, which were welcomed, and the
promotion of greater competition in the Fijian economy; the need for a transparent, stable
basis for foreign direct investment; and remaining exchange and price controls. Members
also raised issues concerning particular constraints on Fiji's development, such as
questions relating to skill development, employment by ethnic and gender groups, and land
tenure issues including changes to the Agricultural Landlord and Tenant Act.
Members referred to the high
dependency of Fiji's trade structure on a small number of products exported to
preferential markets and the consequent effects that the erosion of existing preferences
might have on Fiji's economy and trade. They asked how Fiji would adjust to such erosion
and, in particular, on measures to increase domestic productivity and to diversify export
products and markets.
In reply, the representative
of Fiji stated that Fiji's economic performance in the 1990s had indeed been modest; this
was nevertheless an improvement over the volatile fluctuations of the 1980s. It should be
remembered that Fiji has special features including a small market, frequent natural
calamities and isolation from major markets; these made it difficult to emulate the growth
rates of Fiji's Asian neighbours, although Fiji was drawing appropriate lessons from the
economic progress of South East Asian countries.
The Government recognized
the need for fiscal consolidation and aimed to achieve a balanced budget by the year 2000,
both by restraints on operating expenditures and improved revenue collection. Indirect
taxes now accounted for 53 per cent of Government revenue, compared to 22 per cent from
income taxes; this structure reflected a deliberate attempt to provide incentives for hard
work and effort. Fiji's trade account was traditionally in deficit, reflecting in part the
import of essential raw materials for the production process. The current account had
however turned to surplus in 1996 and should remain so for the next three years. Fiji had
also managed to keep its inflation rate low, at about 3 per cent at present.
The representative noted
nevertheless that Fiji faced a daunting task in the future: in particular, economic
performance was not broad-based and domestic demand, especially investment, remained
subdued. Measures were being taken to promote investment, including Parliamentary
consideration of an Investment Bill, progress in resolving the constitutional and
land-lease issues, incentives to promote hotel construction and a relaxation of exchange
controls. He stressed that Fiji met the Article XIII requirements of the IMF, with no
restrictions on current payments.
The representative added
that Fiji would continue to offer incentives to attract foreign investment and would also
focus on improving the infrastructure such as roads and communications. A number of
specific questions in the areas of foreign direct investment would require a more detailed
response, which would be provided at a later date. He emphasized that there were no
barriers to foreign investment in sugar-milling. He went on to note that the Public
Enterprise Act was now in place, and implementation was being elaborated; he also
indicated that several measures were being taken to promote human resource development and
education. He emphasized that, while the Government aimed to abolish price controls, there
was strong political and labour pressure for their maintenance.
General trade policy questions
Members welcomed Fiji's
moves since 1989 to more outward-oriented policies, with elimination of quantitative
restrictions and reductions in the average level of tariffs. Some members drew attention
to the slowing pace of tariff reform and import liberalization; they encouraged Fiji to
continue progress on this front and in relation to deregulation. Members also noted the
escalation of tariffs through stages of processing, remaining tariff peaks on such
products as processed rice and motor vehicles, and the application of duties on beverages
and tobacco that exceeded bound levels; they sought information on the future direction of
tariff reforms and any particular sectoral focus.
Some members asked about the
importance of tariff revenue for Fiji in the light of its fiscal imbalance. In this
context, some sought information on Fiji's policy regarding tariff exemptions and
concessions, noting that there was substantial leakage of revenue through such measures,
which could introduce additional distortions in the structure of protection.
Questions were asked about
industrial promotion measures, including the use of subsidies and export credits;
questions were also posed regarding conditions of operation of Export Processing Zones,
Tax-Free Zones and Tax-Free Factories.
Members noted that although
Fiji had as yet no legislation regarding trade remedies (anti-dumping, countervailing and
safeguards), the Fair Trading Decree was to be modified to include anti-dumping measures.
Some Members asked whether the Decree would also cover countervailing measures and
encouraged Fiji to introduce WTO-consistent provisions; however, one Member pointed out
that there was no obligation under WTO provisions to introduce such legislation.
One Member asked if Fiji
could ensure MFN and national treatment for foreign suppliers in government procurement
and whether Fiji intended to join the relevant WTO Agreement.
Questions were asked
regarding Fiji's growing participation in regional trading arrangements, including
SPARTECA and the Melanesian Spearhead Group. The question was asked whether Fiji expected
such agreements to compensate for the loss of preferential access in other markets.
Particular attention was also paid to the application of rules of origin under regional
and preferential agreements and their effects on Fiji's trade.
One Member and a discussant
raised questions regarding the application of internationally recognized core labour
standards in Fiji. A number of others stressed that, consistent with the Singapore
Ministerial Declaration, such questions should properly be addressed in the ILO.
In reply, the representative
of Fiji stated that in past number of years Fiji had concentrated its efforts on trade
liberalisation through the removal of licences and the reduction in tariffs. Tariff reform
had slowed in recent years, in recognition of the fact that trade liberalisation needed to
take place in concurrence with reforms in other sectors in the economy, including in
labour and capital markets and the public sector. For the present, further tariff
reductions would await the outcome of the Deregulation Policy Review, which had been
commissioned following recommendations of the 1994 National Economic Summit.
On more specific matters,
the representative noted that the application of specific rates of duties on some
commodities were an attempt to protect against revenue evasion by importers. All applied
agricultural tariffs were below bound rates, with most at 22.5 per cent. The matter of
reducing applied rates on alcohol and tobacco to their bound levels needed to be
considered in the context of health, revenue and WTO timeframes. The high rates of duty on
motor vehicles had been introduced to raise revenue, but were being reduced. Fiji intended
to eliminate the disparity in the excise duty on locally manufactured cigarettes with
imported tobacco and those with domestically grown tobacco. Licence control on butter was
removed in 1995 and in 1997 Fiji removed concessions and import quota restrictions on
powdered milk. Further questions on customs valuation matters, such as the confidential
treatment on information and the importer's right to written explanations, were being
addressed in the process of updating legislation.
On regional and preferential
arrangements, Fiji had sought a relaxation of SPARTECA rules of origin but had been
unsuccessful. A bilateral arrangement with Australia and New Zealand was now being
explored and was intended to assist Fiji's companies to ultimately adjust to an open,
non-preferential trading environment. Fiji's bilateral arrangements with other South
Pacific island countries were part of its overall policy to harmonize and liberalize trade
on a regional basis. On wider regional interests, Fiji was watching developments with a
view to aligning its trade reform with APEC policies. The representative also noted that
Lomé and GSP discussions were now underway and that Fiji's position would be given at a
In respect of core labour
standards, he emphasized that the ILO was recognized in the Singapore Ministerial
Declaration as the competent body to set and deal with such standards; questions raised in
this meeting should therefore be dealt with by the ILO.
Other specific areas of concern
Members recognized the
dependence of Fiji on a few sectors, including agriculture, garments and tourism. They saw
an urgent need for diversification within the agricultural sector, in particular away from
the present emphasis on sugar to encourage greater commercialization, diversification and
increased efficiency of resource use. Agricultural policies should be geared to these
Members asked questions
concerning Fiji's sanitary and phytosanitary (SPS) regulations; while these appeared
compatible with the relevant WTO Agreement, specific issues were raised concerning imports
of fruit, vegetables, flower seeds, foodstuffs, and various drugs and pharmaceuticals.
More generally, one Member suggested that Fiji should, under the TBT Agreement, base its
standards on international standards rather than those of major trading partners such as
Australia and New Zealand.
The relatively high level of
tariffs on fish was noted. Questions were asked concerning Fiji's management of fishery
resources and prohibitions on exports and imports under the Fisheries Act.
Members posed questions
regarding measures to encourage greater competitiveness in the clothing sector, which had
increased its importance in exports.
Members recognized the
importance of the services sectors, particularly tourism and transport, to Fiji. The
development of a new policy statement by the Fijian Government on services was welcomed
and further information was sought on the scope and expected timing of the statement. It
was noted that Fiji had not made an offer in the WTO Financial Services negotiations and
the authorities were encouraged to participate actively in the resumed negotiations.
On intellectual property,
some Members welcomed the steps taken by Fiji to implement a new Copyright Act, consistent
with the TRIPS Agreement; information was sought on the passage of the Bill through
In reply, the representative
of Fiji said that a change in its SPS policy from zero to minimal risk had opened up the
market for various agricultural products, including poultry, Written replies would be
provided to the detailed questions on fisheries. Although structural changes in the sugar
industry were being implemented, Fiji regarded the retention of trade preferences as
necessary in the foreseeable future. He recalled that Fiji Sugar Corporation was not
state-owned, although a majority of the shares were held by the Government; although FSC
was the present sole buyer of sugar cane, there was no legal monopoly.
He noted that
diversification of agriculture, which was recognized as important, had to coexist with
sugar, which was Fiji's most viable crop; diversification towards manufacturing was
proceeding, but agriculture remained the mainstay of the economy.
The Government was currently
seeking to implement recommendations of a study on trading and skill development in
respect of niche markets in the clothing sector. He continued that diversification of
exports in the services sector was also important to the Government and that work towards
a Services Policy was currently being undertaken.
In the area of intellectual
property rights, a draft Copyright Bill was now being examined in consultation with WIPO
and was expected to be submitted to Parliament at the end of the year. Fiji was currently
consolidating its request for technical assistance to align domestic intellectual property
legislation with the TRIPS agreement.
***** Back to top
Overall, Members welcomed
the participation by Fiji in the review process, with a strong delegation led at
Ministerial level. They welcomed the steps already taken by Fiji toward greater
transparency in trade policy and the authorities' stated commitment to free and open
trade, and encouraged Fiji to continue along the path of liberalization and deregulations.
They emphasized the importance of diversification of the economy and the need for
development to be pursued on a sustainable basis. The TPRB welcomed the answers given by
Fiji to questions and looked forward to written replies on outstanding issues.