RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/SPEC/VUT/4
25 May 1998
(98-1953)
Working Party on the
Accession of VanuatuOriginal:  English
ACCESSION OF VANUATU
Statement by the Honourable James Bule, Minister of Trade and Business Development,
at the Informal Meeting of the Working Party on the Accession of Vanuatu to the WTO
held on 11 May 1998
Madame Chairperson, Mr. Hussain, distinguished members of the Working Party on the
Accession of Vanuatu, ladies and gentlemen.
I would like to begin by thanking the Chairper son for the gracious hospitality she has shown
towards the Vanuatu delegation. Without her kind assistance the Vanuatu delegation would have hadgreat difficulty in attending this meeting.
Let me begin by also thanking the WTO Secretariat and the forum for the technical assistance
they have provided to the Government of Vanuatu.  Our officials together with the forum and the
WTO  have been working hard to answer the many questions  that have been posed by members of
the Working Party.  I trust they have done the work well.
I would like to begin by outlining the Comprehensive Reform Programme which the
Government of Vanuatu has initiated.  Just last week the Government signed a Technical Assistance
Agreement with the Asian Development Bank which will provide the back-up to undertake the
reforms.  The reforms are both of a political and economic nature.  They will aim at stabilizing the
political system to diminish the number of votes of no confidence that have in the past been such a
source of instability.
The Government of Vanuatu will introduce before the Parliament several important pieces of
legislation that will focus on public sector reforms.  Most importantly, the Government will by
1 August introduce a  value-added tax of 12.5 per cent.   We have already introduced several key
public service reforms and also intend to table the investment and leadership codes by July of this
year.  We are reforming the work permits system to limit the discretion of Ministers and strengthenjudicial review in all matters relating to application of investment permits and incentives. These
reforms will render Vanuatu’s laws to be consistent with best practice in the APEC area.  All the draft
legislation that is to be introduced to Parliament is now available with the WTO Secretariat
(Accessions Division, Room 1126).
We undertake these reforms in the full knowledge that without them we have little hope of
seeing the full benefits of the expanding global economy.  These reforms are difficult for Vanuatu and
like so many other structural adjustments will involve considerable pain for sectors of the economy.
We will continue to require the assistance and understanding of our development partners in the
difficult months and years ahead.
As you can see, the Government has, in its most recent replies to questions posed by the
Working Party, attempted to address the concerns  raised regarding the Government’s intention to
honour its WTO obligations. The Government of Vanua tu will, upon accession to the WTO, have inWT/ACC/SPEC/VUT/4
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place legislation that is WTO compatible. This is, of course, contingent upon technical assistance
being provided to draft this legislation.
There are, however, several areas where we feel that there is a need for some measure of
understanding and flexibility from the members of the Working Party.  As you are no doubt aware
Vanuatu is a least-developed country with a population of 170,000, with the vast majority living in
rural areas and are, by and large, involved in subsistence production.
In small countries such as ours, passage of legislation through Parliament is not difficult. This
is especially so where the Government has a good working majority and the legislation is not
controversial. As long as the technical assistance is provided expeditiously by our development
co-operation partners and multilateral institutions that  have made commitments to assist us in the
difficult task of drafting this legislation, then we feel sure we can have legislation in place before the
final sitting of Parliament in November of this year.
What we will certainly find difficult, if not impossible, to do is to have developed the
institutional capacity and training to implement the legislation.  It is for this reason that we have asked
for a transition period not on the actual passage of the legislation but on its implementation.
We do not believe that any member of the Working Party that takes into consideration our
development status could not reasonably request more from us in terms of implementation.  I think
that as a compromise, this is reasonable and I trust that other members of the Working Party willagree.
There is, in our view, several requests from the Working Party that we find unacceptable. In
particular we find unacceptable the notion that a small least-developed country like Vanuatu should
be required to undertake binding commitments to plurilateral agreements that are not obligatory.
While we are willing to consider membership of these agreements following accession, we see noreason to accept this as a condition of accession.
There is, however, another area where we find difficulty with some of the conditions required
by the Working Party.  There has been a request that Vanuatu agree to bind itself  never to introduce
export subsidies.  In many ways this question is academic as Vanuatu has never used export subsidies
and certainly does not have the resources to do so in the foreseeable future.
Having said that, Vanuatu does not employ export subsidies it is quite another matter to bind
itself to never introduce such subsidies.  Annex VII of the Agreement on Subsidies and
Countervailing Measures states quite clearly that least-developed countries are exempted from the
disciplines of Article III.  Vanuatu has stated quite categorically that it will honour all of its
obligations under the covered Multilateral Agreements of the WTO.  If export subsidies are prohibitedfor all countries in a subsequent round of negotiations then Vanuatu will surely honour such
obligations.
The work of this Working Party has now continued for almost three years. My officials have
answered hundreds of questions and we have devoted a substantial amount of time despite scarce
resources to become a Member of the WTO.  You may well ask why a small country like Vanuatu
should extend such resources in the accession process.  It is a question that is frequently asked of us
both by WTO Members and at home.
For a small country like Vanuatu where the bulk of trade is already duty free because of the
nature of our exports and the preferential agreements we have with other countries, there is almost
none of the traditional trade benefits of increased market access.WT/ACC/SPEC/VUT/4
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First, our accession is about bringing our laws into conformity with accepted international
standards.  It is about assuring transparency and openness of our government.  We believe that the
benefit of this will be that we will be able to better attract both foreign and domestic investment.
However, the most pressing reason for joining the WTO is that since the Uruguay Round, it is
perfectly evident that the WTO is not simply about tr ade.  It is rapidly evolving into the principle
global economic forum of the Twenty-first century.  The question arises as to whether we participatein a process that realistically we know we cannot effect in any meaningful way.
In our view, irrespective of our size, Vanuatu, working together with other nations, must
participate in the process of shaping the global trading environment.  We did not gain our
independence so as to remain powerless and voiceless.
As I have said the Working Party has been deliberating on Vanuatu’s accession. We have
already had bilateral negotiations with several WTO neighbours.  We are hopeful that any further
requests from members for bilaterals can be done as expeditiously as possible so that the up-comingSeptember meeting of the Working Party will be the last substantive meeting of the Working Party.
However, in making those bilateral requests I hope that WTO Members are mindful of the fact that
Vanuatu is not only a least-developed country it also has no system of direct taxes and as a result
remains highly dependent upon the collection of revenue from import duties.  This will remain the
case even once VAT is introduced. Vanuatu has already made a binding commitment to phase outimport duties upon aircraft and information technology products.  Vanuatu has also substantially
reduced its bindings.  These are decisions with serious revenue implications.  However, we have done
this not simply because WTO Members requested this but because we feel that this is a concrete
policy that can assist in decreasing the cost to business of our relative isolation  and we are hopeful
that WTO Members recognize the commitments already made  as well as the economic position ofVanuatu.
Madam Chairperson. I thank you and the other members of the Working Party for their
patience and indulgence.  Thank you.
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