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II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES
(1) Institutional Framework
1. In1970, Fijibecame asovereign, independent State, within theCommonwealth. Itbecame
aRepublic, andlefttheCommonwealth, on7October 1987. Under its1990 Constitution, Fijiisa
multi-party State.
2. ThePresident ofFijiistheconstitutional Head ofState, withafive-year, renewable termof
office. ThePresident, whoalsoholds executive authority, isappointed bytheGreat Council ofChiefs
(Bose Levu Vakaturaga). ThePresident 'sCouncil advises himonanymatters ofnational importance.
ThePresident appoints asPrime Minister, toheadtheGovernment, theindigenous Fijian whoappears
bestabletocommand thesupport ofthemajority ofhisfellow Members oftheHouse ofRepresentatives.
ThePrime Minister andother Ministers, allofwhom mustbeMembers oftheHouse ofRepresentatives
ortheSenate, formtheCabinet. Ministers areappointed bythePresident, ontheadvice ofthePrime
Minister; thePresident mayrequire theresignation oftheMinisters, including thePrime Minister,
fromoffice.TheCabinet,whichcurrentlycomprises17Ministers,formulatesthepolicyofGovernment.
3. Legislative authority inFijiisvested inParliament. Under theConstitution Fijihasabicameral
legislature comprising a70-seat House ofRepresentatives1andaSenate of34members. Members
oftheHouse areelected byuniversal adult suffrage, while Senators areappointed bythePresident
ontheadvice oftheBoseLevu Vakaturaga (24members), theRotuma Island Council (onemember)
andinhisownjudgment (ninemembers). Theenactment ofaparliamentary billinmostcases requires
itspassage byboththeHouse ofRepresentatives andtheSenate.2Abillmayoriginate either inthe
House ofRepresentatives orintheSenate. Private billsmaybeinitiated intheSenate and,ifpassed
byamajority ofallmembers intheSenate, arepresented totheHouse ofRepresentatives aspublic
bills. AHouse Member mayalsoinitiate aPrivate Member 'sBill. When abillhasbeenpassed by
theHouse ofRepresentatives, inmostcases itissenttotheSenate, andsubsequently tothePresident
forassent. Billsaredivided intotwocategories: money billsandnon-money bills. IftheSenate does
notpassamoney billtheHouse ofRepresentatives maynevertheless submit thebilltothePresident
forassent, afterwhich itbecomes law.Withregard tonon-money bills, uponrejection bytheSenate,
theHouse ofRepresentatives reconsiders theBillbutcanonlysubmit itsixmonths afterthefirstreading.
ThePresident, ontheadvice ofthePrime Minister, maydissolve theHouse ofRepresentatives. The
members oftheSenate arenotaffected bythedissolution oftheParliament.
4. TheConstitution isFiji'shighest law,followed bynational law,andministerial regulations
anddecrees. TheConstitution, andthrough itFijian laws, haspriority overinternational treaties.
International treaties, including those related totrade, aresigned bythePresident, butmustberatified
byParliament before being incorporated intoFijian law. Unless embodied inFijian legislation, the
invocation ofWorld Trade Organization (WTO) provisions mayhavepersuasive butnotdecisive effect
onacourt. Domestic legislation isamended totheextent necessary tobring itintoconformity with
obligations undertaken byFijiinthecontext ofinternational treaties oragreements.
1Ofthe70seats, 37,27,1and5areelected byvoters registered asFijians, Fiji-Indians, Rotumans and
general voters (non-Fijian andnon-Indian), respectively.
2Appropriation bills, money bills, andurgent billsmaybepresented forPresidential assent after passage
through theHouse ofRepresentatives.Fiji WT/TPR/S/24
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5. TheSupreme Court ofFijiisthefinalcourt ofappeal, followed bytheCourt ofAppeal and
theHigh Court. TheMagistrates 'Court deals withsummary offences andcivilcases withafinancial
limit. TheSupreme Court isthesuperior courtofrecord withunlimited jurisdiction tohearanycriminal
orcivilcases, aswellasthose involving interpretation oftheConstitution.
6. Fijiisdemarcated intofourdistricts foradministrative purposes: Central, based inNausori;
Eastern, based inLevuka; Northern, based inLabasa; andWestern, based inLautoka. Eachofthese
hasadministrative jurisdiction overthevarious provinces thatcome within thedistrict division. There
are14provinces intotal, eachgoverned byacouncil, withanexecutive headappointed bytheFijian
Affairs Board (FAB). Urban affairs aregenerally administered bycityandtown councils.3
(2) Structure ofTrade Policy Formulation andImplementation
7. Themain Fijian Ministries incharge ofissues relating tointernational trade aretheMinistry
ofCommerce, Industry, Trade, andPublic Enterprises (MCITPE) andtheMinistry ofFinance and
Economic Development (MOFED); authority forcertain trade-related matters extends totheMinistries
ofAgriculture, Fisheries andForests (MAFF); Health; Lands andMineral Resources; andtotheReserve
Bank ofFiji(RBF). Responsibilities fortrade inservices aremainly divided among theMinistries
ofFinance andEconomic Development; Tourism andCivil Aviation; Information, Broadcasting,
Television andTelecommunications; andCommunications, Works andTransport.
8. Except intheareaoftariffs, theMCITPE isdirectly responsible forFiji'sgeneral merchandise
tradepolicies. Thus, itisincharge ofpolicies thatserve ascontrols onimports andexports; monitors
economic trends, assesses Fiji'spotential inspecific industries, andfacilitates economic activities
(ChartII.1).ShouldanyotherMinistriesbeconcernedwithimportlicensingorprohibitionstheyconsult
withtheMCITPE (Chapter III(2)(vii)). Aninterministerial committee, theTrade Development
Committee, decides matters relating tomultilateral andotherbilateral tradeagreements.4TheMCITPE
isalsoresponsible forprivatization, under thedirection ofthePrivatization Committee.5
9. TheMinistryofFinanceandEconomicDevelopmentadministersFiji'stariff,underthelegislative
authority oftheCustoms Act,theCustoms Tariff ActandtheExcise Act.Tariff ratesareimplemented
bytheMinistry 'sCustoms andExcise Department (CED). Proposals forchanges intariffs aremade
bytheCED. TheComptroller oftheCED consults withtheBudget Section oftheMOFED regarding
proposed changes intariffs, butfinalauthority onproposals restswiththeMinister. Actual changes
intariffratesarenormally effected inthecontext oftheBudget, which requires Parliamentary approval.
TheCED collects revenues andenforces lawsonimport-prohibited goods. Tariff concessions are
generally granted bytheMinister ofFinance andEconomic Development (Chapter III(2)(ii)(f) and
III(3)(vi)). TheMOFED alsooversees theReserve Bank ofFiji(RBF).
3FTIB (1995/96a), p.15.
4TheCommitteeischairedbythePermanentSecretaryoftheMCITPE.Committeememb ersincludeofficials
from theMCITPE, MAFF, Foreign Affairs, theCustoms andExcise Department (CED), theSolicitor General 's
Office, FijiTrade andInvestment Board (FTIB). Representatives oftheprivate sector mayattend meetings of
theCommittee, ifthelatter sorequests.
5ThisCommittee, chaired bythePermanent Secretary oftheMCITPE, comprises highlevel officials from
thePrime Minister 'sOffice, thePublic Service Commission, theSolicitor General 'sOffice andtheMOFED.WT/TPR/S/24
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10. TheFijiTrade andInvestment Board (FTIB) promotes foreign andlocal investment by
administering theTaxFreeFactory andTaxFreeZone facilities andincentive schemes; conducting
investment seminars andinvestment promotion missions; organizing trademissions topotential markets;
identifying localandforeign joint-venture partners; conducting export marketing assistance; andacting
asliaison between theprivate sector andgovernment bodies. TheRBFischarged withmaintaining
monetary stability andinthiscontext ithasadministrative authority overforeign exchange transactions
andmonetary policy. TheDepartment oftheEnvironment intheMinistry ofUrban Development,
Housing andEnvironment isresponsible forco-ordination ofenvironmental protection measures. The
Department assists specialist Ministries indeveloping techniques ofenvironmental monitoring and
management.
11. Theprivate sector mayinfluence thelegislative process, andtradeandrelated policies, through
consultation withMinistries byvarious associations, suchastheFijiChamber ofCommerce, theFiji
Employers Federation, theFijiMaster Builders Association, theFijiHotel Association, theFiji
Manufacturers Association andtheFijiTrades Union Congress. TheFijian Initiative Group (FIG)
enhancesindigenousFijians'participationinbusiness,throughthesubmissionofvariouspolicyproposals
toGovernment. TheFIGwasestablished in1992andcomprises indigenous senior civilservants and
private-sector executives.6
6MOFED (1995), p.39.Fiji WT/TPR/S/24
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(3) Policy Objectives
12. Themain objective ofFiji'scurrent economic policy istoenhance therôleofmarket forces
intheallocation ofresources, withaviewtodiversifying theeconomic base. Trade andinvestment
policies areamong thekeycomponents ofeconomic policy. Since 1988, Fijihasswitched itstrade
policy direction from inward- tooutward-oriented, toimprove itsgrowth potential. Liberalization
measures havebeennumerous, including theremoval oflicence control, thesimplification ofthetariff
andwithdrawal ofsubsidies onprimary commodities.
13. According totheauthorities, itisFijian policy tocontinue toliberalize thetrade régime; to
contribute tobuilding andmaintaining anopenmultilateral trading system based ontheWTO; and
tostrengthen andexpand Fiji'sintra-regional trade through closer co-operation. Itishoped thattrade
policy willleadtoincreased trade innon-traditional markets, particularly inAsia, andtothegrowth
ofexports ofmanufactured andvalue-added resource-based products. Fijibenefits frompreferential,
duty-free access foritsproducts toAustralian andNewZealand markets andforsugar totheEuropean
Union (EU) andtheUnited States, andwishes tocontinue suchpreferential status.
14. Theauthorities regard inward foreign direct investment (FDI) asanimportant toolforincreasing
Fijian employment, exports, andthelevel oftechnology andmanagement skills. Fiji'sinvestment
policy principles are:toincrease investment inallareas oftheeconomy andfrom allsources; to
encourage market-driven investment, through facilitation rather than regulation; tomake no
discrimination between foreign andlocal investment ingeneral; andtoensure transparency inany
necessary regulations.7Taxincentives aregranted tofirms designated asTaxFreeFactories, regardless
ofwhether theyarelocalorforeign (Chapter III,Annex III.1).
(4) Laws andRegulations
15. Themain legislation governing Fiji'sinternational trade ingoods aretheCustoms Act1986,
theCustoms Tariff Act1986, andtheExcise Act1986. These arecomplemented bytheCustoms
Regulations 1986, theCustoms (Prohibited Imports andExports) Regulations 1986, theCustoms Tariff
(Industrial Rebates) Regulations 1986, theExcise Regulations 1986, andtheExcise (Industrial Rebates)
Regulations 1986.8Other legislation ofrelevance tothetraderégime aretheFairTrading Decree 1992,
theTrade Standards andQuality Control Decree 1992, theGovernment Supplies Regulation 1982,
theNational andTrade Measurement Decree 1989 andseveral Actsgoverning intellectual property
rights (Chapter III(5)). TheIncome TaxActcovers thedetails ofrelief from income tax. The
Companies Act1983 governs thesetting upofacompany.9
7Fijicurrentlyhasnoformalinvestmentpolicy,buttheMCITPEispreparinganInvestmentPolicyStatement.
8Import- andexport-prohibited goods arestipulated intheAnimals Importation Act(Cap. 159), theArms
andAmmunition Act(Cap. 188), theDangerous Drugs Act(Cap. 114), theExchange Control Act(Cap. 211),
theExplosives Act(Cap. 189), thePlant Quarantine Act1982, theQuarantine Act(Cap. 112), thePharmacy
andPoisons Act(Cap. 115), theFisheries Act(Cap. 158), theMining Act(Cap. 146), andthePreservation
ofObjects ofArchaeological andPalaeontological Interest Act(Cap. 264).
9Alicence feeisrequired toengage inanybusiness inFiji. Thefeeissetandadministered byrespective
cityandtown councils withtheapproval oftheMinister forUrban Development andHousing, ortheChief
Accountant forareas outside themunicipalities. Thefeesrange from F$10 toF$2,000, withmost businesses
paying afeebetween F$100 andF$200 perannum.WT/TPR/S/24
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16. Themainlawscovering theservices areaare:theHotels AidAct,theMarine Regulation Act,
theCivil Aviation Act,thePostandTelecom Decree 1989, theReserve Bank ofFijiAct,theBanking
Act,theInsurance ActandtheExchange Control Act. Price control measures aregoverned bythe
Counter Inflation Act.Fijihasnoformal lawcovering investment asawhole. Currently limits on
foreigners 'equity participation aresetbygeneral guidelines, although theMarine Act,theMining
Act,theFisheries Act,theHotels AidAct,andtheExchange Control ActrefertoFDIinsome specific
areas. Fijiisasignatory totheMultilateral Investment Guarantee Agency (MIGA) oftheWorld Bank.
(5) Trade Agreements andArrangements
(i) Multilateral agreements
17. Fijiaccords atleastm.f.n. tarifftreatment toallitstrading partners. Fijibecame acontracting
party totheGATT on16November 1993, prior towhich ithad,since independence, applied GATT
onadefactobasis. Itwasnotasignatory to,norobserver inanyoftheTokyo Round Agreements.
Fijiparticipated intheUruguay Round negotiations, particularly inagriculture, where itisamember
oftheCairns Group.10Fijibecame amember oftheWTO on14January 1996. Fijiisnotasignatory
toanyofthePlurilateral Agreements resulting from theUruguay Round.
18. TheGATT Working Committee, aninter-ministerial committee, chaired bythePermanent
Secretary oftheMCITPE, wassetupinDecember 1994 toexamine theimpact of,andthenecessary
changes inFijian legislation toallow implementation oftheUruguay Round Agreement. After Fiji's
ratification oftheAgreement, theCommittee wasrenamed theWTO Implementation Committee. The
Committee makes recommendations totheCabinet onrequired changes inFijian legislation in
consequence oftheUruguay Round Agreement.
19. Fiji,asdidtheother participants, bound allitsagricultural tariffs intheUruguay Round. In
industry, Fijibound some 42.5percentofitstarifflines, atauniform rateof40percent. Inservices,
Fiji'sscheduled commitments inthecontext oftheGeneral Agreement onTrade inServices (GATS)
cover,asofSeptember1996,aspectsoftourismandtravel-relatedareas,includinghotelsandrestaurants.
20. According totheauthorities, Uruguay Round participants such asFijithatbenefit from
preferential access tomajor markets will,inconsequence oftheRound 'sresults, havetheirmargins
ofpreference reduced, which could negatively affect exports. Inaddition, theelimination ofthe
Multifibre Arrangement andthephasing-out ofquantitative restrictions under theAgreement onTextiles
andClothing willopenthesector togreater competition fromlow-wage producers andmore efficient
suppliers.
10Other members oftheCairns Group areArgentina, Australia, Brazil, Canada, Chile, Colombia, Hungary,
Indonesia, Malaysia, New Zealand, thePhilippines, Thailand andUruguay.Fiji WT/TPR/S/24
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(ii) Regional agreements
(a) TheLomé Convention
21. Fijiisasignatory totheLomé Convention between theEuropean Union (EU)and70countries
inAfrica (allsub-Saharan African countries except South Africa), theCaribbean andthePacific (ACP).
Thecurrent, fourth, Lomé Convention running totheendofFebruary 2000, extends non-reciprocal
trade preferences totheACPStates. Subject toasafeguard clause andrulesoforigin11,commodities
fromACPStates,exceptthosecoveredbytheCommonAgriculturalPolicy,entertheEUfreeofcustoms
duties andquantitative restrictions. Trade preferences under Lomé IVaffect some 40percentofEU
imports fromACPStates, withalargemajority oftheremaining imports entering theEUmarket either
dutyfreeonanm.f.n. basis orunder theEU'sGeneralized System ofPreferences (GSP) rates.
22. EUsupport toACP States isaccorded through theEuropean Development Fund, themain
assistance instrument oftheEU;theEuropean Investment Bank forcommercial loans; theStabilization
ofExport Earnings Scheme (STABEX), which currently covers 49agricultural products andisaimed
atreducing theimpact ofpriceorquantity fluctuations onanACPcountry 'sexport earnings; andSysmin
which isafinancing facility forminerals. EUaidintheperiod 1989-1995 totalled F$75.5 million;
Fijihasnotreceived EUtransfers under STABEX intheperiod since1989. According totheauthorities,
there arenorulesoforigin under theLomé Convention thatparticularly affect Fiji. Themajority of
Fiji'sexports undertaken inthecontext oftheLomé Convention aresugar andcanned fish. In1975,
Fijiacceded totheSugar Protocol annexed totheLomé Convention, withaspecial preferential allocation
ofsugar exports totheEU(Chapter IV(2)(i)).
(b) TheSouth Pacific Regional Trade andEconomic Cooperation Agreement (SPARTECA)
23. TheSPARTECA, originally implemented in1981, isapreferential non-reciprocal agreement
covering theForum Island Countries (FICs) andAustralia andNewZealand.12Theaimoftheagreement
istoachieve progressively infavour ofFICsduty-free andunrestricted access tothemarkets ofAustralia
andNewZealand, withaviewtoaccelerating theeconomic development oftheFICs. Fiji'sexport
benefits under SPARTECA aremainly frommanufactured goods suchasgarments (Chapter IV(4)(i)).
24. SPARTECA covers virtually allproducts fromtheFICs. Itincludes provisions foreconomic,
commercial andtechnical co-operation, hassafeguards against product dumping, andincludes special
provisions forthesmallest FICs. In1986, SPARTECA wasamended toallow inputs fromNewZealand
orAustralia tocomprise upto25percentoftherequired minimum 50percentlocal-content requirement
forexports from aFICtoqualify forSPARTECA treatment intoAustralia orNewZealand. Since
11TheLomé IVrules oforigin require thatqualifying products beeither "wholly obtained" or"sufficiently
worked orprocessed" inoneormore ACP States. Thelatter definition isbased onachange in4-digit HStariff
classification.
12TheFICs areCook Islands, Fiji,Kiribati, Marshall Islands, Micronesia, Nauru, Niue, Papua NewGuinea,
Solomon Islands, Tonga, Tuvalu, Vanuatu, andWestern Samoa. Formore details onSPARTECA, see
WTO (1996), pp.44-45.WT/TPR/S/24
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thattime, NewZealand haseliminated alltariff andquantitative restrictions onimports from FICs,
while Australia haseliminated essentially all.13
25. InJuly1994, NewZealand agreed toachange intherulesoforigin forFiji'sgarment exports
thatwould lower Fiji'slocal-content requirement to45percent. Thisderogation applies foraninitial
three-year period, afterwhich itistobereviewed. Australia agreed toinclude more marketing and
packaging elements inthecalculations oflocalcontent, achange thatleaves the50percentruleintact
buthasasimilar beneficial effect. Australian andNewZealand tradeliberalization programmes contain
timetables forthephase-down oftariffs ingarments, footwear andmotor vehicles. Textile andgarment
tradebetween Australia andNewZealand wasliberalized under theCloser Economic Relations (CER)
Treaty of1989, andNewZealand abolished quotas ontextile imports in1992. According tosome,
tomeet thelocal-content requirements, Fijian industries havetended topurchase capital goods and
rawmaterials from Australia andNewZealand rather thanfromthelowest costsource markets, and
haveunder-invested innewtechnology tomaintain ahighlabour-cost share.14
(c) TheSouth Pacific Forum
26. Fijiisamember oftheSouth Pacific Forum (SPF), apolitical grouping ofindependent and
selfgoverning States intheSouth Pacific, established in1971 todevelop acollective response to13
regional issues. ItsSecretariat islocated inSuva. TheSPFmembership totals 15,theFICs, Australia
andNewZealand. Atthe1992meeting oftheSPF,thePrime Minister ofFijiannounced some measures
ofassistance tothesmall countries oftheregion, including scholarships, aconsultancy scheme and
theFiji-Forum Island Countries Trade Agreement. ThisAgreement aimstopromote trade between
FijiandherPacific Island neighbours, buthasnotgonebeyond theplanning stage.
27. Fijibecame aMember oftheMelanesian Spearhead Group (MSG) inSeptember 1996. The
Group wasestablished in1991, withPapua NewGuinea, Solomon Islands andVanuatu asfounding
Members. Thecurrent members areFiji,NewCaledonia andthethreefounding Members. TheMSG
isanentity withpolitical orientation, pursuing theobjective ofpolitical co-operation among Members.
In1994, itwasextended toinclude atrade agreement, withduty-free access tocertain products such
asedible fruits andnuts, coffee, coconut-milk powder, jams, portland cement, andcertain wooden
furniture. Fijiisnotcurrently aparty totheMSG trade agreement.15
13Oneexceptionisspirits;spiritsmadeinFijiandimportedintoAustraliaaresubjecttoadutyofA$36.84per
litreofalcohol content.
14World Bank (1995), p.41.
15Membership oftheMSG doesnotautomatically extend totheMSG Trade Agreement, which isbetween
itsfounding States; Fijian membership needs tobenegotiated.Fiji WT/TPR/S/24
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(d) AsiaPacific Economic Cooperation
28. TheSPFholds observer status intheAsiaPacific Economic Cooperation (APEC). Fijias
anactive member oftheSPFattends APEC meetings through theobserver status oftheSPF.
(iii) Bilateral agreements
29. Fijihasabilateral tradeagreement withTonga. Theagreement isnon-reciprocal, formulated
afterbothcountrieshadnegotiatedabilateralquarantineprotocoloncertainitemsofagriculturalproduce.
TheFijiGovernment agreed togrant duty-free access to20agricultural items imported from Tonga
(Chapter III(2)(ii)(e)). Fijialsohasabilateral trade agreement withPapua NewGuinea, which is
reciprocal, covering 45products under which Fiji'sexports toPNG aresubject totariffs of10per
cent, compensating forthe10percentVAT onallPNG exports toFiji. Fijiisalsointheprocess
ofnegotiating bilateral agreements withKiribati, Solomon Islands, Tuvalu andVanuatu.
(iv) Generalized System ofPreferences (GSP)
30. Fijiisabeneficiary oftheGSPschemes of21countries (Chapter III(3)(ix)).
(v) Other agreements andarrangements
31. Besides theWTO, Fijiisalsoamember ofanumber ofmultilateral organizations thathave
economic responsibilities, including theInternational Monetary Fund, theWorld Bank, theAsian
Development Bank andUNCTAD.
(6) Trade Disputes
32. Fijihasnotbeeninvolved inanyformal disputes intheWTO, andnorhasitbeenathirdparty
toanysuchdispute.
33. Among theFICs, theForum Secretariat istheformalized arbitration point ifdisputes arise;
todate,there havebeennodisputes. SPARTECA hasitsowndispute settlement mechanism, which
hasdealtwithanumber ofdifferences between FijiandbothAustralia andNewZealand onlocal-content
issues.