WORLD TRADE WT/TPR/M/24/Add.1
23May1997
ORGANIZATION(97-2169)
Trade Policy Review Body
9-10April 1997
TRADE POLICY REVIEW
FIJI
MINUTES OFMEETING
Addendum
Answers toWritten Questions
Thefollowing communication wasreceived on2May1997 from theDelegation ofFiji
responding toquestions raised bydelegations andthediscussants during thereview.
_______________
1. Foreign Direct Investment (Questions posed bytheUnited States)
1.1 Inpara87,theReport states thatalthough thereisnoformal requirement forforeign investors
touselocalcontent, theProjects Committee oftheFijiTrade andInvestment Board "encourages" the
useoflocalrawmaterials. What isthenature oftheencouragement oftheProjects Committee? Are
investors everdenied approval because offailure toguarantee useoflocal content?
Aproposal isassessed initsentirety andlocal content isbutoneofthefactors looked at.By
"encouragement" ismeant thattheprojects Committee (which includes high-level officials from the
various bodies fromwhich approvals mustbeobtained) willtakeintoaccount theuseoflocally sourced
rawmaterials when assessing whether togrant concessions. Avalid reason fornotusing localraw
materials issufficient toexclude thisfactor fromtheassessment. Thiscould include theinferior quality
oflocalrawmaterials, forexample.
Local content ishowever, notaprerequisite forinvestment approvals onitsownandthere havenot
beenanycases where failure tocomply withthisguideline hasdisqualified theinvestment proposal.
1.2 More generally, what istheroleoftheTrade andInvestment Board -doesitscreen each
investment, orisit,asinthetext,justa"one-stop service system" forforeign investors?
FTIB hasabroad range offunctions given toitunder section 5oftheFijiTrade andInvestment Board
Act1986. These functions maybesummarized asattracting foreign investment through promotion,
information dissemination, facilitation andassessment.
Currently,theFTIBadvisesandassistsinvestorstoprovideallinformationnecessarytomakeacomplete
application. TheProjects Committee which meets attheFTIB andincludes FTIB aswellasGovernment
andReserveBankofficials,ischargedwithassessinginvestmentproposalsandmakingarecommendationWT/TPR/M/24/Add.1
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totheMinisters forCIT&PE1andforF&ED2.Endorsement bybothMinisters isrequired forfinal
approval.
Theinvestment approvals system isbeing reformed. Inthefuture, thiswillseetheremoval ofthe
requirement forMinisterial endorsement andwillensure thatassessment andpower toapprove will
bevested intheFTIB andProjects Committee. Clear, simple andtransparent criteria willbenecessary
toreduce thescope fordiscretionary decision making before theproposed system becomes practical.
Implementation ofthese measures, asarticulated inFiji'snewInvestment Policy, isunder way.
1.3 TheSecretariat 'sReport alsostates that"allforeign investors havetogothrough theFTIB
either toapply fortaxandcustoms concessions ortoseekstatutory clearances fromtheRBF(Reserve
Bank ofFiji)ortheImmigration Department". Itisnotclear ifallthese applications aremandatory
oroptional -wewould likeclarification.
Theaboverequirementsaremandatoryforallforeigninvestorsapplyingfortaxandcustomsconcessions.
Foreign investors notapplying forconcessions needstatutory clearance fromRBFandtheImmigration
Department. Insuchinstances, thetwodepartments prefer thatapplications gothrough thesystem.
Whilst notmandatory, thisishighly recommended. AnFTIB approval letter expressing thesupport
totheProjects Committee3greatly speeds upgranting ofapproval.
1.4 Dodomestic investors alsoneedtogothrough these processes, e.g.togettaxconcessions?
When applying fortaxorcustoms concessions, domestic investors havetogothrough thesameprocess.
Authority togrant concessions restswiththetwoMinisters andtheFTIB/Projects Committee process
isthevehicle forgaining Ministerial endorsement.
Where onlystatutory approvals aresought, there isnosuchrequirement.
1.5 Have there beencases where aforeign investor hasbeenprevented bytheFTIB frominvesting
inFijiordenied access tovarious subsidies andtaxbenefits?
Yes. Insuchcases, theproposal didnotmeetapprovals criteria.
1.6 What doesitmean thattheapproval process isdiscretionary? What aretheguidelines which
areusedintheapproval process?
Thecriteria andguidelines aresometimes general withnospecific thresholds andtheycanalsovary
fromsector tosector. Theinterpretation andapplication ofthese guidelines andcriteria istherefore
subject tosome discretion (similar toacourt oflawinterpreting legislation). Itinvolves officials from
Government, RBFandFTIB sitting ontheProjects Committee anddeciding whether aninvestment
proposal is'good'or'bad'.
1Commerce, Industry, Trade &Public Enterprises.
2Finance &Economic Development.
3High-level officials from theRBF andtheImmigration Department sitonthePC.WT/TPR/M/24/Add.1
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Thegeneral guidelines usedarethataproject should:
- assist indeveloping Fijionasound economic basis;
- generate increased exports;
- provide opportunities forsignificant equity participation bylocals, particularly inprojects that
involve theutilization ofthecountry 'snatural resources;
- provide training andemployment opportunities forsignificant numbers oflocalpeople;
- involve maximum processing ofproducts inFiji; and
- involve theenterprise intheprovision ofmaximum common usefacilities, suchasroads and
labour.
1.7 Inpara89,itisstated thatpermission maybegiven forforeigners toacquire controlling interest
inFijian enterprises atthediscretion oftheMinister fortheCIT&PE andtheMinister fortheF&ED.
whatarethecriteria usedingiving discretion?
Essentially,localandforeigninvestorsaretreatedalikewhenconsideringinvestmentsinlocalenterprises.
Theexceptions would becertain service sectors where thepolicy istoencourage localcontrol. This
howevermaybewaivedatthediscretionofthetwoMinisters,forexamplewheretheinvestmentproposal
isexpected tobeespecially beneficial totheeconomy (see1.11below). Other thanthesecases, foreign
investors arefreetoinvest subject tothenormal criteria.
1.8 Howoften ispermission notgranted? What aresome representative cases ofrefusal? For
example, hasaninvestment everbeenturned down onthebasis:
(a) thatFijians would notbeshareholders orhaveacontrolling interest?
(b) thattheinvestment constituted thetakeover ofalocal enterprise?
(c) thattheinvestment wasinasensitive sector other thansugar milling, casinos andlotteries?
(d) thatinsufficient capital wasbeing brought infromoutside ofFiji?
(a) Investments havesometimes beenrefused incertain service industries where itisgeneral policy
toencourage localcontrol (ie.controlling interest). However, suchcases involve ananalysis
ofthebenefits totheeconomy andarenotdecided onthedegree oflocalinterest alone.
Itisnotarequirement thatlocals must beshareholders;
(b) Refer to(a)above;
(c) Refer to(a)above;
(d) Asageneral guideline, aminimum investment of$100,000 isrequired. Ofcourse theProjects
Committee maywaive thisatitsdiscretion. There havebeenfewcases declined inthisregard.
Itshould beremembered thatsuchrefusals areforconcessions andincentives; proposals maystill
beimplemented, albeit without theconcessions andincentives applied for.WT/TPR/M/24/Add.1
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1.9 Doforeign-owned companies registered inFijihavethesame rights under theSouth Pacific
Regional Trade andEconomic Cooperation Agreement (SPARTECA) asdomestic-owned companies?
Yestheydo.
1.10 HowdoestheGovernment actually "encourage" jointventures -doesitpressure theforeign
investor oruseother strong-arm tactics? Ifnot,howcanitbeeffective ingetting aforeign investor
toinvite theGovernment tojoininitsproject (anditsprofits)?
Nopressure isapplied byGovernment. Investors areinstead attracted bythestability, capital,
concessions, andother assistance thatGovernment canprovide inajointventure.
Tosetupajointventure withGovernment, aformal application hastobemade totherelevant Minister,
depending onthetypeofproject.
1.11 Inpara90itisreported thatforeign investment islimited to49percentinservices (restaurants,
wholesale andretail). What istherationale forthislimitation? These sectors donotinvolve resources
orstrategic commodities suchasfoodorenergy -whymusttheybesheltered fromforeign control?
Thelimitation isaguideline onlyandserves toprotect small businesses which veryoften arerunby
local entrepreneurs andarecommon insuchsectors. Itisgovernment policy toencourage local
participation incommerce tohelpensure thatthebenefits ofeconomic growth areshared equally by
allsections ofthecommunity.
Thisrequirement isnotlegislated (with theexceptions below) andisapplied atthediscretion ofthe
Projects Committee. Examples where the49%levelcanbedecreased orwaived arewhere theservice
provided isnewtothecountry orusesnewtechnology which canbeofbenefit tothelocalcommunity.
Currently, therequirement onlyapplies inlegislation tothesetting upofCustoms House Agents under
theCustoms Actandforoperating marine/leisure cruises under theMarine Act.
2. Price Control (Questions posed byNewZealand)
2.1 Section III,para71ofS/24refers tothreedifferent typesofpricecontrols, namely: percentage
mark-up, fixedmaximum price anda12-week written notification forproposed increase. Table III.10
liststheitems under pricecontrol bythePIB.Wenotethatforcertain products suchasbutter, plywood
andcanned cornbeefandmutton, theprices ofimported product andlocalproduct comeunder different
methods ofpricecontrol. Could Fijiexplain thereasons forthisandconfirm thatlikeproducts, whether
localorimported,aretreatedequallyandinaccordancewithArticle3ofGATT1994concerningnational
treatment?
Price controls areimposed onbasic consumables where itisfeltthedependence onthese items by
thecommon people warrant protection against exorbitant prices. Controls arealsoimposed tocorrect
market imperfections suchasunfair monopolistic pricing.
Fixed maximum pricing issimple anddirect andtherefore desirable inmostcases. Butthisrequires
athorough understanding ofallrelevant coststosetapricelimitthatdoesnotunfairly affect theprofits
ofthevendor.
ThePIBrecognizes thatforimported goods, thediverse distribution chain including import, several
levels ofwholesale andretail, canmake thisadifficult task,hence theuseofthepercentage mark-up
system. Thismethod makes anallowance fortheadditional costs ofimporting.WT/TPR/M/24/Add.1
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Forsome locally produced goods, thesame problem isencountered where itisdifficult toascertain
thefullcostofbringing thegoods intotheshop. Plywood andcanned cornbeefandmutton sometimes
gothrough aseries ofdistribution rungs allthewaytoruralconsumers whorelyonsuchitems. The
wholesale andretail ofthese items aretherefore placed under percentage mark-up control. Local and
imported like-products aretreated equally.
Furthermore, toensure thatlocally produced plywood andcanned cornbeefandmutton remain
competitive withimported products, Government hasimposed fixedmaximum prices ontheex-factory
prices ofthese goods.4
3. Preferential Market Access (Question posed byAustralia)
3.1 What action isFijitaking toprepare fortheerosion ofpreferential market access which it
currently enjoys under arange ofpreferential agreements suchasSPARTECA, Lomé andtheGSP?
Fijirecognizes thecrucial importance ofenhancing efficiency andproductivity inorder tobe
internationallycompetitive.Ofparticularconcernarethesugarandgarmentsectorswhichhavebenefited
immensely from preferential access.
Various programmes havebeeninitiated, orareplanned, toraiseinternational competitiveness. These
include human resource development, production management andintroduction ofappropriate
technologies.
Onawider front, economic reform isaimed atchannelling resources intotheirbestuses. Fijiiswell
down thepathofderegulation, privatization andtrade liberalization andisconstantly looking tomake
thisprocess assmooth andaspainless aspossible. Laws andstandards arebeing created orimproved.
Overall these measures aredesigned tocreate anenvironment conductive tocommerce andtrade.
Itisaccepted thatthesugar industry faces aspecial problem withthelandlease issue. Aspecial
committee isworking hardtoreach anamicable solution.
Ontheissue oftrade preferences, particularly forLomé, Fijiwould liketoseesome measure of
preference retained beyond theyear2000. Thisshould afford enough timetoadjust tointernational
competition. Itisaccepted thatsome ofthecurrent preferences arecontrary toWTO principles and
thatinfuturethesemayneedmodification,perhapsinvolvingamorereciprocal,tariff-basedarrangement
aswellasemphasis ontechnical assistance. Tothese ends, acommon position andunified lobbying
bytheACPwillbeneeded. Formulation oftheACP'sformal position willbecarried outintheACP
Summit inGabon inOctober 1997.
4. Notification (Question posed byNorway)
4.1 Under thesection onTrade Remedies (p.29intheEnglish version) itissaidthatFijihasneither
safeguards noranti-dumping norcountervailing measures ineffect against atrading partner. Fijidoes
notappear tohavemade any"negative" notification tothiseffect totheWTO. Whyisthis?
4Ex-factory prices ofcanned cornbeefandmutton were under the12-week written notice system before
July1996.WT/TPR/M/24/Add.1
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Fijirecentlyupdateditsnotificationrequirements.NotificationofNegativeAnti-dumpingandSafeguards
were senttotheWTO Secretariat on13February 1997. Notification onCountervailing Measures
wassubmitted on14February 1997.5
5. Fisheries (Questions posed byCanada andNorway)
5.1 What isFiji'spolicy onthesustainable development ofthefisheries sector?
Fiji'spolicy istomaximize theeconomic benefit arising fromproducts within ourmarine spaces, whilst
atthesametimeensuring sustainability oftheresource. Specifically, thefollowing policy andstrategy
elements havebeendeveloped:
(a) expand andconsolidate tunafisheries within Fiji'sExclusive Economic Zone (EEZ) under the
industrial fisheries programme;
(b) encourage greater efficiency andimprove thequality offishavailable toconsumers inthesmall-
scale commercial fisheries sector;
(c) assist ruralfishermen intheirtransition from subsistence tosmall-scale commercial fishing;
(d) develop aquaculture through continued research intoappropriate production technologies and
extension programmes;
(e) further develop theEEZandterritorial water fisheries;
(f) improve thequality andincrease thevalue-added ofexports;
(g) regulate andcontrol allfisheries, ontheprinciples ofoptimum utilization andlong-term
sustainability;
(h) encourage theimplementation ofsound business management methods bylocalfishermen;
(i) improve thehandling andprocessing ofdomestic fisheries.
5.2 What istheprocess toexport liveturtles/fish, etc?
Export oflivefishisbanned under theFisheries Act. ThePermanent Secretary forAgriculture,
Fisheries&Forestsmaygrantexemptionsuponwrittenapplicationbytheintendingexporter(5.4below).
There isnorestriction ontheexport ofliveturtles under theFisheries Act. However Government
recently imposed abanonthecatching ofallturtles, untiltheyear2000.6Thiswasintroduced for
conservation reasons. Again, thecultural significance ofturtles hasbeenkeptinmindandtheMinistry
responsible forEnvironment7hasbeenempowered togrant exemptions forthecatching ofverysmall
numbers.
5Allnotifications beartheFijifilereference 1/5/29.
6Upon theexpiry oftheban,areview ofturtle stock willbeconducted todetermine theneed forfurther
protection.
7Ministry ofUrban Development, Housing &Environment.WT/TPR/M/24/Add.1
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5.3 What isthevolume offishimported intoFijiandwhatarethetopfoursource countries?
Fijiimported F$28.5million worth offishandfishpreparations in1996, amounting to15.4million kg.
involume.
Thefourleading source countries accounted foralmost threequarters ofallimports andwereasfollows:
Country Value (F$) Volume (kg.) %ofTotal import
value
Chinese Taipei 12,994,211 5,702,320 45.60
NewZealand 4,134,855 4,337,912 14.51
Japan 2,072,430 1,074,573 7.27
USA 1,465,599 767,069 5.14
5.4 Reference ismade tothechapter on"Trade Policy Framework andObjectives" (p.13inthe
English version). Under thesubtitle "Laws andRegulations" thereisafootnote saying thatimport-and
export-prohibited goods arealsostipulated intheFisheries Act(Cap. 158). What kindofproducts
areincluded?
Under theFisheries Actthefollowing areprohibited from export:
1. Swimming crabs under 5inches inlength;
2. Turtle shells under 18inches inlength;
3. Trochus shells under 3.5inches inlength;
4. Pearl oyster shells under 4inches inlength;
5. Bêche-de-mer under 7.6cm;
6. Davui shells;
7. Giant clam(Giant helmet shell);
8. Porpoise ordolphin;
9. Sand fish;
10. Turtle flesh;
11. Alllivefish.
Foralltheabove, exemptions canbesought from thePermanent Secretary forAgriculture,
Fisheries &Forests. Exemptions areissued forcultural, educational orreligious reasons.WT/TPR/M/24/Add.1
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Exemptions arealsogiven forcommercial exports ofliveaquarium fish. Thebanonlivefishwas
intended tostoptheexport oflivefoodfish.Because thelegislation hasnotbeenchanged fornon-food
fish,theonlywayaround thisistogrant regular exemptions.
6. Sanitary &Phytosanitary Measures (Question posed byCanada)
6.1 Does Fijifollow international standards intheformulation andimplementation ofSanitary
andPhytosanitary Measures? Ifso,which countries areusedasmodels?
TheSPSmeasures ofAustralia andNewZealand haveoften beenusedasmodels onwhich tobase
Fiji'sownSPSmeasures. WenotethattheAustralian andNewZealand regulations areconsistent
withinternational standards.
Fijialsodraws from twointernational organizations:
(a) ThePacific Plant Protection Organisation, established under theauspices oftheInternational
PlantProtection Convention, isdedicated totheharmonization ofSouth Pacific SPSregulations
withinternational standards including those oftheWTO. Fijiisamember ofthePPPO.
(b) Although notasignatory, Fijifollows theguidelines oftheOffice forInternational Epizootics
(OIE).