Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698745290843.pdf (Micronesia, Federated States of)
FIFTEENTH CONGRESS OF THE FEDERATED STATES OF MICRONESIA FIFTH REGULAR SESSION, 2008 C.R.

NO.

15-153 A RESOLUTION Adopting the Federated States of Micronesia National Trade Policy and ratifying the Pacific Island Countries Trade Agreement (PICTA) dated August, 2001 and its subsequent amendments.
1 WHEREAS, the Strategic Development Plan (2004), the Economic 2 Policy and Implementation Council (EPIC) resolution (2005) and the 3 Chief Executive Council decision (2006) called for the FSM to 4 establish the National Trade Facilitation Committee to assist in 5 the formulation of a National Trade Policy to guide the nation on 6 trade and investment issues; and 7 WHEREAS, the President established the National Trade 8 Facilitation Committee (hereinafter, “NTFC”) through Executive 9 Order Number 34 in January, 2008, which is chaired by the Vice 10 President, with representatives from the National Government, 11 States, the private sector and civil society, to assist the nation 12 in formulating and implementing the Trade Policy; and 13 WHEREAS, the Department of Resources and Development, 14 (formerly Economic Affairs) has held consultations in all the four 15 States since 2006 and gathered the views of the National 16 Government, States, the private sector, civil society and Non- 17 Governmental Organizations on Trade Policy; and 18 WHEREAS, the first meeting of the NTFC was held June, 2008, 19 to consider and finalize the Trade Policy; and 20 WHEREAS, the FSM is facing annual decline in Compact funding CRL 15-156 C.R.
NO.
15-153 1 and a serious economic quagmire, the Trade Policy (trade and 2 investment) has the potential to stimulate private sector 3 development and promote export-led economic growth and sustainable 4 development; and 5 WHEREAS, the objectives of the Trade Policy are to promote 6 exports of value added goods and services (agriculture, fisheries, 7 tourism, labor), create an environment which is conducive for 8 investment and private sector development, address production and 9 supply-side constraints, promote production and consumption of 10 local products and reduce the trade deficit, secure technical and 11 financial assistance (Aid for Trade) from FSM’s trading partners 12 and donors, and guide the nation in negotiating, ratifying and 13 implementing trade agreements including the Pacific Island 14 Countries Trade Agreement (hereinafter, “PICTA”), the Economic 15 Partnership Agreement (hereinafter, “EPA”), the Pacific Agreement 16 on Closer Economic Relations (hereinafter, “PACER”) taking into 17 account the Compact trade provisions; and 18 WHEREAS, the vision of the Trade Policy is to create an 19 environment which is conducive for foreign direct investment, to 20 enable the private sector to produce value added and competitive 21 goods and services, and promote export-led economic growth, self 22 reliance and sustainable development, with the ultimate objective 23 of creating employment, alleviating hardship and raising the 24 living standards of FSM citizens; and 25 WHEREAS, the FSM has signed PICTA, which establishes a free 2 of 6 C.R.
NO.
15-153 1 trade area in goods among the parties, it has not yet ratified 2 PICTA, and PICTA is now being extended to trade in services; and 3 WHEREAS, the Leaders’ meeting in Niue in August, 2008 urged 4 all the countries (FSM included) that have not yet ratified PICTA 5 to do so on or before January, 2008; and 6 WHEREAS, the States’ consultations and the economic and 7 social impact studies have indicated that the impact of ratifying 8 PICTA will be minimal; and 9 WHEREAS, the FSM is a party to the Cotonou Agreement and has 10 already signed and ratified the Fisheries Partnership Agreement 11 with the European Union (hereinafter EU), it is currently 12 negotiating the EPA with the EU and this agreement is expected to 13 be finalized no later than December, 2008; and 14 WHEREAS, the trade provisions in the Cotonou Agreement 15 expired in December, 2007, the EU has provided generous rules of 16 origin for certain products, duty free and quota free access for 17 those countries that sign the Interim EPA; and 18 WHEREAS, Papua New Guinea and Fiji have signed the Interim 19 EPA; and 20 WHEREAS, FSM together with other eleven Pacific countries 21 have not yet signed EPA because of outstanding countries, have 22 been relegated to the Generalized System of Preferences (a worse 23 scheme that what FSM had under the Cotonou Agreement; and 24 WHEREAS, the Interim EPA itself may not impose any 25 significant economic and social impact on the FSM, signing an EPA 3 of 6 C.R.
NO.
15-153 will require the FSM to give the same benefits that it would have given to the EU and to the United States under the most favored nation (MFN) clause in the Compact Agreement and this may have potential revenue consequences; and WHEREAS, to minimize the potential revenue consequences from EPA, FSM will be required to reform its tax system to a value added tax plus system and enter into consultations with the United States on whether and how the MFN provisions will be applied, how to improve the trade and investment relations with 10 the United States in light of preference erosion and also how to 11 secure additional compensation for the lost trade and tax 12 benefits including more Aid for Trade; and 13 WHEREAS, PACER is a cooperation agreement between the Forum 14 Island Countries and Australia and New Zealand, FSM has not yet 15 signed this agreement because if it is extended into a free trade 16 agreement, as is being proposed by Australia and New Zealand, 17 this would trigger the MFN Compact obligation; and 18 WHEREAS the Forum Island Countries are proposing to negotiate 19 a trade, investment and development cooperation agreement with 20 China, if designed properly this agreement may have a positive 21 impact for the economy; and 22 WHEREAS, trade and investment have the potential to lift the 23 nation from economic malaise, underdevelopment and hardship, 24 there is a need to priorities resources for Trade-related 25 activities and provide the necessary assistance to the private 4 of 6 C.R.
NO.
15-153 sector to promote exports and import substitution; and WHEREAS, in order to promote foreign investment to assist in export development and economic growth, FSM needs to adopt the World Bank Report on the Ease of Doing Business in order to create an environment which is conducive for foreign investment and address all the outstanding issues pertaining to investment reforms; and WHEREAS, the amount of work and challenges facing FSM in trade and investment are enormous, there are not adequate human 10 and financial resources to undertake these tasks; and 11 WHEREAS, the FSM has identified all the problems affecting 12 trade and investment in FSM as memorialized in the trade Policy, 13 and now desires to have the Trade Policy adopted as a national 14 document to guide the nation on all trade and investment matters 15 including using the document to secure the resources that are 16 required to implement the Trade Policy at the National and State 17 level; now, therefore 18 BE IT RESOLVED by the Fifteenth Congress of the Federated 19 States of Micronesia, Fifth Regular Session, 2008, that the 20 Congress hereby adopts the Trade Policy including its Annexes; 21 and 22 BE IT FURTHER RESOLVED by the Fifteenth Congress of the 23 Federated States of Micronesia, Fifth Regular Session, 2008 that 24 FSM ratifies PICTA and commences trading under the agreement; and 25 BE IT FURTHER RESOLVED that Congress supports the 5 of 6 C.R.
NO.
15-153 1 implementation of the Trade Policy including the allocation of the 2 necessary resources for the NTFC, and the Department of Resources 3 and Development and other activities identified in the 4 recommendations; and 5 BE IT FURTHER RESOLVED that an annual budget of approximately 6 $150,000 be set aside for the purposes of convening the NTFC to 7 assist with implementing the Trade Policy and conducting annual 8 review of the Trade Policy; and 9 BE IT FURTHER RESOLVED that certified copies of this 10 resolution be transmitted to the President and Vice President of 11 the Federated States of Micronesia, the Secretary of the 12 Department of Resources and Development, the Secretary of the 13 Department Justice and the Secretary of the Department of Foreign 14 Affairs.
15 16 Date: 9/19/08 Introduced by: /s/ Resio S. Moses Joe N. Suka (by request) 6 of 6