Papua New Guinea: November 1999

PRESS RELEASE
PRESS/TPRB/121
17 November 1999

TRADE POLICY REVIEW BODY: REVIEW OF PAPUA NEW GUINEA
TPRB'S EVALUATION Back to top

The Trade Policy Review Body of the World Trade Organization (WTO) concluded its first review of Papua New Guinea's trade policies on 15 and 17 November 1999. The text of the Chairperson's concluding remarks is attached as a summary of the salient points which emerged during the discussion. The review enables the TPRB to conduct a collective examination of the full range of trade policies and practices of each WTO members countries 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 domestics laws and regulations, the institutional framework, bilateral, regional and other preferential agreements, the wider economic needs and the external environment. A record of the discussion and the Chairperson's summing-up together with these two reports will be published in due course as the complete trade policy review of Papua New Guinea 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 & 1999), Australia (1989, 1994 & 1998), Austria (1992), Bangladesh (1992), Benin (1997), Bolivia (1993 & 1999), Botswana (1998), Brazil (1992 & 1996), Burkina Faso (1998), Cameroon (1995), Canada (1990, 1992, 1994, 1996 & 1998), Chile (1991 & 1997), Colombia (1990 & 1996), Costa Rica (1995), Côte d'Ivoire (1995), Cyprus (1997), the Czech Republic (1996), the Dominican Republic (1996), Egypt (1992 & 1999), El Salvador (1996), the European Communities (1991, 1993, 1995 & 1997), Fiji (1997), Finland (1992), Ghana (1992), Guinea (1999), Hong Kong (1990, 1994 & 1998), Hungary (1991 & 1998), Iceland (1994), India (1993 & 1998), Indonesia (1991, 1994 & 1998), Israel (1994 & 1999), Jamaica (1998), Japan (1990, 1992, 1995 & 1998), Kenya (1993), Korea, Rep. of (1992 & 1996), Lesotho (1998), Macau (1994), Malaysia (1993 & 1997), Mali (1998), Mauritius (1995), Mexico (1993 & 1997), Morocco (1989 & 1996), New Zealand (1990 & 1996), Namibia (1998), Nicaragua (1999), Nigeria (1991 & 1998), Norway (1991 & 1996), Pakistan (1995), Papua New Guinea (1999), Paraguay (1997), Peru (1994), the Philippines (1993 & 1999), Poland (1993), Romania (1992 & 1999), Senegal (1994), Singapore (1992 & 1996), Slovak Republic (1995), the Solomon Islands (1998), South Africa (1993 & 1998), Sri Lanka(1995), Swaziland (1998), Sweden (1990 & 1994), Switzerland (1991 & 1996), Thailand (1991 & 1995), Togo (1999), Trinidad and Tobago (1998), Tunisia (1994), Turkey (1994 & 1998), the United States (1989, 1992, 1994, 1996 & 1999), Uganda (1995), Uruguay (1992 & 1998), Venezuela (1996), Zambia (1996) and Zimbabwe (1994).

TRADE POLICY REVIEW BODY:   REVIEW OF PAPUA NEW GUINEA
CONCLUDING REMARKS BY THE CHAIRPERSON Back to top

We have had a very informative and open discussion of Papua New Guinea's trade policies. This was aided by the PNG delegation, led by the Secretary of Industry and Trade, Mr. Michael Maue, which clearly outlined PNG's current economic situation and the Government's reform plans, as well as the favourable policy changes already introduced.

It is my feeling that we have gained a full appreciation of the economic and development setting in which PNG's trade policies are implemented. The performance of the economy has fluctuated, and the current outlook remains far from certain. The economic and political reforms currently being embarked upon by the Government should help promote sustainable growth and improve living standards. While rich in natural resources, such as minerals and forests, Papua New Guinea remains one of the Pacific region's poorest economies, with income per head of US$900 in 1996. Structural reforms, although imperative, nevertheless entail significant adjustment costs. I was also struck by the delegation's commitment to using trade policy as a development instrument and by its call for additional resources for the TPRM.

Members have emphasized the importance of improved economic management and good governance in enhancing PNG's economic performance. Moreover, PNG's economic difficulties have been compounded by recent external shocks. These include the Asian economic crisis, declining world prices for key commodity exports, such as minerals and logs, and the effects of the drought on agricultural and mining output. Members therefore recognized the difficulties facing the PNG Government, and welcomed its renewed commitment to trade liberalization and further economic reforms aimed at improving the economy's productivity.

Members welcomed the bold tax reform package implemented by the authorities from 1 July 1999. Average tariffs have been cut from 20% to 9%, and a 10% value added tax introduced. The new Government has also acted swiftly to introduce a Supplementary Budget in August 1999 aimed at fiscal discipline and macro-stability. Members complimented the Government on its efforts to re-engage discussions with the World Bank and the IMF. This would assist the completion of the Structural Reform Programme and regain international confidence. They encouraged PNG to press ahead with such reforms, including privatization of state-run enterprises and implementation of more open and transparent foreign investment policies. The important role of foreign aid and technical assistance was also acknowledged.

Against these broadly favourable developments to further integrate PNG into the world economy and the multilateral system, Members were appreciative of the delegation's clarification to their queries in a number of areas, including:

change in ministerial responsibility for trade;

notifications to the WTO;

high applied tariffs, a few of which appear to exceed bound rates, on several primary and semi-processed products, and some increased tariffs under the reform programme;

tariff and other policies designed to promote agriculture, fisheries and domestic food processing;

the impact of regional trade initiatives;

the transparency and openness of the foreign investment regime and the role of investment promotion, including in financial services;

export policies, including taxes on logs and tax incentives;

custom valuation procedures, especially the use of the fallback value method;

the impact of PNG standards and testing procedures on imports, as well as stringent quarantine restrictions and bans on animals, fruit and vegetables;

the lack of significant intellectual property legislation and enforcement;

limited GATS commitments in services;

the privatization process, especially of key utilities, such as electricity, telecommunications and transport sectors;

distortive effects of continued price controls;

participation in the Government Procurement Agreement;

competition policy;

public sector corruption; and

the deteriorating business climate, including the serious law and order problem.

In conclusion, I am of the strong view that Members appreciated the new Government's reform efforts to date, and encouraged it to continue on its path of trade and investment liberalization. They welcomed the efforts made by the Government to undertake this Review at a difficult time, and noted the Government's support of the multilateral trading system and the role played by the Trade Policy Review process. I was struck by the Government's acceptance of the need for major policy reforms and, along with members, welcome PNG's participation in the WTO, in particular the forthcoming talks in Seattle.