WORLD TRADE
ORGANIZATIONWT/TPR/M/62
4 January 2000
(00-0004)
Trade Policy Review Body
15 and 17 November 1999
TRADE POLICY REVIEW
PAPUA NEW GUINEA
Minutes of Meeting
Chairperson:  H.E. Mr. Jean-Marie Noirfalisse (Belgium)
Page
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3
II. OPENING STATEMENT BY THE REPRESENTATIVE OF PAPUA NEW GUINEA 4III. STATEMENT BY THE DISCUSSANT 5IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY 7V. REPLIES FROM THE REPRESENTATIVE OF PAPUA NEW GUINEA AND
ADDITIONAL COMMENTS 10
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 12
ANNEX ADVANCE WRITTEN QUESTIONS AND RESPONSES BY THE 15
DELEGATION OF PAPUA NEW GUINEA WT/TPR/M/62
Page 3
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON
1. The Trade Policy Review of Papua New Guinea was held on 15 and 17 November 1999.  The
Chairperson, H.E. Mr. Jean-Marie Noirfalisse (Bel gium), welcomed the Secretary of the Department
of Trade and Industry, Mr. Michael Maue, as head of the delegation of Papua New Guinea.  He also
introduced the discussant, Ms. Catherine Grant (New Zealand), and reminded Members that shewould speak in her personal capacity and not as a government representative.  In accordance with
established procedures, the discussant had made available in advance an outline of the main issues she
would raise.
2. The Chairperson recalled the purpose of the Trade Policy Reviews and the main elements of
the procedures of the meeting.  The report by the Government of Papua New Guinea (PNG) was
contained in document WT/TPR/G/62 and that of the WTO Secretariat in document WT/TPR/S/62.
Copies of written questions, submitted in advance by  Canada;  New Zealand;  Australia;  the Republic
of Korea;  Hong Kong, China;  the United States;  Japan;  and the European Union had been provided
to the delegation of Papua New Guinea.  These together with responses by the delegation of PNG, are
contained in the Annex.WT/TPR/M/62
Page 4
II. OPENING STATEMENT BY THE REPRESENTATIVE OF PAPUA NEW GUINEA
3. The representative of Papua New Guinea, Mr. Michael Maue, welcomed this first Trade
Policy Review of PNG as an important and timely  process in assisting his Government to map out
appropriate trade policies for promoting development.
4. He referred to the daunting economic tasks inherited by the new Government, which took
office in July 1999.  Major external shocks in 1997 and 1998 had seriously affected the economy.
These included the drought, which had severely cut agricultural and mineral production;  also world
commodity prices had fallen, especially for logs, gold and oil, following the Asian economic crisis.
Poverty had increased and the provision of essential services as well as the law and order problem had
worsened.  Nevertheless, PNG's economic difficulties were undoubtedly compounded by the previous
Government's economic mismanagement.  The kina had fallen sharply and foreign reserves dropped
to record low levels.  Inflation had reached almost 14%.
5. The incoming Government had expressed its commitment to the Structural Reform
Programme negotiated with the World Bank and the IMF.  The Government's objectives are to:
promote good governance;  sustain macro economic stability;  improve public sector performance;
and remove investment barriers.  A Supplementary Budget, aimed at restoring the kina's value and
controlling public debt, was introduced in Au gust 1999, and the Department of Planning and
Implementation was established.  The Government had also made major tariff cuts whereby
maximum rates would be further reduced to 40% by 2006.  These were financed by the introduction
of a value-added tax and a non-discriminatory excise taxes on luxuries.  Multilateral and bilateral aid
donors, in particular Australia, had welcomed these efforts, and had pledged total support of
US$500 million.  The Government was also committed to continuing the Bougainville peace process.
6. PNG's trade policy was based on four components.  Firstly, as a founding member of the
WTO, PNG remained committed to a strengthening of  the multilateral trading system.  Secondly, it
embraced the concept of 'open regionalism' adopted by APEC members.  Thirdly, it encouraged
regional integration within the Melanesian Spearhead Group.  Fourthly, it strongly supported
non-reciprocal trading arrangements, like SPART ECA and the Lomé Convention, which had assisted
PNG in establishing export industries.  The PNG Government believed that regional integration
within the MSG had complemented MFN trade liberalization.
7. The PNG Government strongly supported the use of trade policy to promote downstream
processing, export diversification, and domestication of industry.  In particular, the Government was
committed to adding value in agriculture and to its natural resources of forestry and fisheries.  A trade
and development policy based on a static view of the nation's comparative advantage and optimizing
resource rents was unacceptable.  The collection of such rents by landowners had been a major causeof the nation's land problems.  While some previous attempts to promote downstream processing and
economic diversification had lacked long-term economic viability and had been unsuccessful, some
had succeeded, such as the export development of oil palm and processed coffee.  Promoting
sustainable economic development was central to PNG trade and development policies.
8. The representative concluded by commenting on the extremely useful transparency role
played by the review process.  He called on WTO Members to devote additional funding to the Trade
Policy Review Mechanism.  The PNG representative also stated that a greater degree of policy
coherence was needed between the WTO, the World Bank, and the IMF.WT/TPR/M/62
Page 5
III. STATEMENT BY THE DISCUSSANT
9. The discussant (Ms. Catherine Grant) referred to PNG as one of the Pacific's least developed
countries with low social indicators, despite its rich resource base.  Economic growth had been
volatile during the 1990s.  In recent years, the economy's performance had been severely affected by
several external shocks and natural disasters, including the Asian financial crisis and the drought.These had lowered economic growth by an estimated 2.5% in 1997 and 2% in 1998.
Economic environment
10. Macroeconomic policies, including unsustainable fiscal expansion and serious structural
imbalances, had destabilized the economy and compounded PNG's economic problems.  An economic
and financial crisis had resulted.  Inflation had reached 14% in mid 1999 and interest rates remained
over 20%.  The kina had declined in value and go vernment debt stood at approximately 50% of GDP.
PNG needed to implement more prudent monetary and fiscal policies.  The Economic RecoveryPackage of June 1999 and the new Government's S upplementary Budget provided encouraging signs,
as did its renewed dialogue with the World Bank and the IMF.
11. The tax and tariff reform package implemented from 1 July 1999 reflected the Government's
commitment to reform.  Substantial across-the-board tariff reductions were funded by the introduction
of a 10% value-added tax.  This diversified PNG's tax base, and the lower and more simplified tariffstructure also benefited its trading partners.  The tax system was being reviewed, aimed at further
liberalization.
12. A transparent and predictable investment regime was also needed.  Greater foreign direct
investment in PNG would devel op domestic industries, including services, and allow management
and other skills to be transferred from abroad.  However, if foreign direct investment was to beattracted, PNG needed not only to revise its national investment policy, but also to address broader
concerns, such as infrastructure, governance, and the law and order problems.
13. PNG was involved in several regional trading arrangements, especially APEC and the
Melanesian Spearhead Group (MSG), as well as  SPARTECA and the Lomé Convention.  Along with
other South Pacific Forum members, it was exploring the formation of a free-trade area aimed atgaining economies of scale for its industry and underpinning domestic reforms.  These initiatives
needed to be pursued in a manner consistent with the multilateral trading system.  Neither APEC or
MSG were expected to create substantial trade in the near term.  PNG's multilateral and regional
trading partners could assist PNG's reforms by maintaining open markets for its exports.
Trade policies, practices and measures
14. Tariffs were PNG's main intervention measure.   The July reforms had cut the MFN average
rate from 20% to 9%, and further phased reductions to 5% would occur by 2006.  Bound tariffssubstantially exceeded applied rates.  Duties were ad valorem , except on alcoholic beverages.  The
transparency of the tariff structure was also enhanced by the removal of discretionary exemptions and
efforts to rationlize the use of incentives.  Few formal non-tariff barriers existed.  Anti-dumping
legislation had rarely been used, but PNG did have fairly stringent quarantine regulations, especially
for fruit and vegetables.
15. PNG had no export quotas or subsidies, and was not a party to any voluntary restraints.
However, some tax concessions assisted investment and production.  Export taxes and other controls
were applied to unprocessed logs, aimed at maintaining sustainable production and promoting
domestic ownership.  Although these measures were supported by the World Bank, they still raised
questions about who bore the costs and whether a more efficient means existed to protect the industry.WT/TPR/M/62
Page 6
16. The Government intended to introduce a national competition policy, aimed at making the
domestic market more competitive.  Other pro-competitive measures to be taken included the
privatization of the telecommunications sector and its de-monopolization in 2002.  The coverage of
price controls had also been reduced.
Sectoral policies17. Forestry, minerals and fisheries accounted for some 50% of the country's GDP, with
agriculture being the most important.  Agriculture wa s not assisted by export subsidies, and PNG had
successfully pursued agricultural diversification, including the processed coffee and palm oil
industries.  Sustainable production policies are applied in the fisheries and forestry sectors, consistent
with moving towards gradual domestication.  Efforts had been made to revitalize investment in the
minerals sector, and a number of long term projects were under consideration, such as the gas pipeline
to Queensland.
18. Most basic services, such as electricity, telecommunications, and transportation, were
inefficiently provided by state-owned entities.  This increased business costs and reduced
competitiveness.  Continued public sector reforms, including corporatization and privatization, were
needed to ensure future growth of the PNG economy.WT/TPR/M/62
Page 7
IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY
19. Members appreciated PNG's commitment to the multilateral trading system and the reform
efforts taken to date by the new Government to liberalize trade and investment and to restore fiscal
discipline.  They made particular mention of the tariff cuts implemented on 1 July 1999, and the
introduction of a value-added tax, as well as the Supplementary Budget that was passed inAugust 1999.  Members encouraged the Government to continue these reforms under its Structural
Reform Programme, in conjunction with the World Bank and the IMF.
20. The representative of Hong Kong, China noted Hong Kong, China's trade links with PNG and
welcomed PNG's policy of gradual trade liberalization as part of its continuing Structural Adjustment
Programme.  She was pleased that PNG had reformed its customs administration and tariff structure,
but was concerned that some products had been reclassified to increase duties, and that high tariffs
were retained on several important products.  While noting positively PNG's liberal governmentprocurement system, she encouraged the authorities to remove preferences provided to local suppliers
on small contracts.  She also raised the existence of import restrictions on live animals, cabotage
polices for domestic shipping as well as the desirability of privatizing ports.  On regional
arrangements, she hoped that PNG would continue with its liberalization efforts, and noted that a
free-trade area was not a necessary or sufficient condition for an open and liberal trading regime.
21. The representative of Canada commended the PNG Government's commitment to
broad-based economic reform reflected in its on- going Structural Adjustment Programme and the
June 1999 Economic Recovery Package.  Such a policy of gradual liberalization and integration with
the world economy was consistent with the Go vernment's WTO and APEC commitments.  He
congratulated PNG for the fiscal disciplines and reforms announced in its Supplementary Budget,
especially to contain the deficit to 1.7% of GDP and to increase transparency by instituting a review
of public expenditure and taxation.  This, combined with renewed dialogue with the World bank and
the IMF, should increase international conf idence in the PNG economy and facilitate the
Government's far-reaching privatization programme.  The representative applauded the Tariff
Reduction Programme, which cut average applied MFN tariffs from 20% to 9%, and welcomedfurther phased reductions proposed over eight years to reduce the average to 5%.  He was
disappointed, however, that certain tariffs had been increased to protect domestic producers.
22. Canada had a strong and diverse bilateral rela tionship with PNG.  Canadian investment was
mainly in the minerals sector.  The representa tive welcomed PNG's decision in the Supplementary
Budget to remove the 15% withholding tax on the minerals sector, and was watching with interest the
final outcome on the "fly-in-fly-out" tax on expatriate personnel used by the mining sector.  He noted
that the Mining Levy proposal was to be applied on a project-by-project basis rather than to thecombined gross revenue of  a number of projects.  Canadian development assistance to PNG was
substantial.
23. The representative of Japan welcomed PN G's Structural Adjustment Programme and
macroeconomic reforms, such as controlling the fisc al deficit.  Japan had important trade links with
PNG.  As a significant foreign investor in PNG, Japan appreciated the Government's efforts tosimplify and improve the transparency of its investment regime.  Although PNG bound all the tariff
lines during the Uruguay Round, bound tariffs on some products remained high.  The representative
appreciated PNG efforts to reform domestic policies, such as national certification and conformity
testing procedures, and plans to introduce and enforce intellectual property protection.
24. The representative of New Zealand appreciated PNG's continued willingness to participate in
international efforts to expand global trade, despite the economy being adversely affected by several
external shocks.  Its commitment to trade and economic liberalization was demonstrated by its
membership of APEC and the WTO, and recent steps taken to open the economy, such as the tax and
tariff reforms as well as efforts to increase the role of the private sector.  Nevertheless, he raisedWT/TPR/M/62
Page 8
concerns over the higher average MFN tariffs, under the reform programme, of 10% for unprocessed
products compared with 2% on semi-processed goods and 6% on fully processed products.  He also
urged PNG to lower its agricultural tariffs to ensure the lowest possible uniform levels.
25. While welcoming the reduced coverage of price controls, the representative encouraged
authorities to re-consider the benefits of any such measures, and their administrative costs.Privatization had been a consistent plank of successive governments, but with little progress.  This
was needed to improve the performance and efficiency of state-owned enterprises.  New Zealand
appreciated the reduction of tariffs by PNG on barracuda, which had reversed earlier increases.
26. The representative of the United States drew attention to the important trade and other
bilateral interests between her country and PNG.  The PNG economy had experienced recent
difficulties due to external factors, such as the Asian financial crisis and a severe drought.  She
congratulated the Government for adopting its Econom ic Recovery Package, including the broad tax
and tariff reforms, and its efforts to foster private-sector-led growth.  PNG had increased the
transparency and predictability of its trading system by binding tariffs in the Uruguay Round, and
through membership of APEC and the World Customs Organization in 1998, as well as
implementation of the WTO Customs Valuation Agreement.  She was concerned that several
non-tariff measures, including quotas, bans, and quarantine and testing procedures that appearedunscientifically based, could limit agricultural imports.  Although PNG had made GATS
commitments for financial and telecommunication services, she hoped these would be met and that
PNG would broaden commitments to cover other services.
27. The representative emphasized that PNG had little intellectual property legislation, but
appreciated the Government's establishment of the Intellectual Property Office and its intention toadopt necessary legislation by 2000 on copyrights, patents, industrial design and trade-marks.  She
also encouraged PNG to develop clearer and transparent rules on foreign investment, including
reviewing the list of activities re served for PNG citizens, and to privatize and demonopolize state-run
enterprises to increase competition and reduce consumer prices.  Good governance and sound fiscal
policies supported by the World Bank and the IMF were also necessary for PNG's development.
28. The representative of Australia welcomed the PNG Government's recent introduction of a
major economic and political reform programme, and its renewed discussions with the World Bank
and the IMF.  He urged PNG to reach early agreement with these multilateral institutions, which
would also restore international confidence.  PNG appeared committed to structural issues, including
developing a governance framework for reforming the Rural Development Fund.  Australia had an
important trade and economic relationship with PNG, including as a source of substantial foreign
investment, especially in the mining and petroleum sectors.  While the representative welcomed thetariff reform programme, introduced from 1 July 1999, he noted that some high rates remained and
that duties had been raised on several products.  He also referred to some tariff inconsistencies and
arbitrary rates, such as dairy produce being duty free while imported flavoured milk was dutiable at
40%, as well as disproportionately high levels of protection for certain manufacturing items, including
sugar, fish canning, and cement.  This penalized consumers and inhibited export industries.  Australiawelcomed PNG's review of its investment procedures, which had become a major obstacle to
Australian investment, and efforts to liberalize these arrangements, such as reducing the list of
industries reserved for domestic investors.
29. The representative of the Republic of Korea referred to PNG's recent economic difficulties,
including the impact of the Asian financial crisis on commodity export prices.  However, he felt that
the Government's commitment to domestic reform would overcome its current stagnation.  Korea was
one of PNG's major trading and investment partners .  He sought additional details on how the PNG
Government intended to develop its commercial fisheries and to liberalize foreign investment.WT/TPR/M/62
Page 9
30. The representative of the European Union highlighted PNG's current economic difficulties,
characterized by high public debt, rising inflation, weak external competitiveness, and low levels of
foreign investment.  He encouraged PNG to contin ue its reforms, including implementation of the
Economic Recovery Programme, and its participation in and development of WTO-compatible
policies.  The Government had already taken or announced a number of positive steps, such as tariffrationalization under the Tariff Reduction Programme;  alignment of domestic standards with
international norms;  introduction of a national competition policy;  review and simplification of
foreign investment policies and phasing out of sectoral restrictions;  privatization;  and commitment to
open the postal and telecommunication markets to foreign competition.
31. Nevertheless, the representative noted a number of areas where further efforts were needed.
These included the maintenance of pockets of high protection, such as in agriculture, which
contributed to high food prices;  negative tariff escalation, which discouraged domestic processing ofraw materials;  import bans and restrictions on fruit, vegetables, and live animals;  export bans or
restrictions on forestry or fish products;  and continued price controls on staple products.  He also saw
a need to address fundamental problems, including remedying the obvious institutional weaknesses in
PNG's capacity to implement trade policy;  improv ing the worsening business climate;  solving the
serious law and order problem;  and combatting public sector corruption.  PNG's participation in
bilateral discussions with the EU on post-Lomé cooperation was noted, and the representative urged
PNG to play a more important regional role, including in the formation of a free-trade area among
Pacific countries.  PNG's lack of WTO notifi cations was a concern, and PNG was encouraged to
participate more actively in the multilateral process.WT/TPR/M/62
Page 10
V. REPLIES FROM THE REPRESENTATIVE OF PAPUA NEW GUINEA AND 
ADDITIONAL COMMENTS
32. The representative of Papua New Guinea expressed his appreciation for the positive
comments offered by WTO Members and the points raised during the discussions.  He referred to the
Government's substantial liberalization efforts, made as part of its APEC membership, and PNG'swish to integrate more fully into the world community.  The Government, as a developing country,
was doing all it could to ensure that its WTO and APEC commitments were met.  It acknowledged
that the private sector was more efficient at doing business, and was taking measures to reform the
public sector.  A timetable on the Government's privatization programme would be available by 2000,
and public sector functions identified as redundant would be discontinued.
33. On investment, he noted that Volume 1 of the Government's Investment Policy had been
released in 1998, and that his Government had recently endorsed a second volume aimed at increasinginvestment openness and transparency.  A third volume – to be released by 2001 – was also being
prepared to provide specific investment guidelin es for individual sectors and details of government
incentives.  The tax system was being reviewed, and a national competition policy, a draft of which
was recently released, was expected to be in place by 2000.
34. The representative indicated that his delegation had provided written responses to questions
raised by Members under three main themes:  the economic environment;  trade policies by measure;
and sectoral policies.  PNG would also provide written responses to the Secretariat on outstanding
questions, such as on fisheries.
35. The discussant sought details of the recent tr ansfer in PNG of respons ibility for trade issues
between departments, and urged PNG to increase its notifications to the WTO to improve
transparency.  She also enquired whether PNG was pl anning to conduct any studies into the benefits
to PNG, such as from improved economies of scale for domestic industry, of regional trade
arrangements like the Melanesian Spearhead Group and the proposed free-trade area among Pacific
economies.  This was important given that the PNG Government had acknowledged that such
arrangements were unlikely to generate large trade-creation effects in the near future.  She also askedwhether there was any timetable for completion of discussions with the World Bank and the IMF.
36. The representative of Papua New Guinea confirmed that the trade functions, including WTO
matters, had been transferred recently from the Department of Foreign Affairs to the Department of
Trade and Industry.  However, APEC responsibili ties remained with the Department of Foreign
Affairs.  He agreed that it was important for PNG to comply with the WTO notification requirements
and that his Government was working hard to do so.  On regional trading arrangements, a study had
been completed, referred to in the Secretariat's report, but had been handicapped by data deficiencies.Although no specific timetable was available on when the discussions with the World Bank and the
IMF would be completed, it was receiving high prior ity by the Government and that it was in PNG's
interests to conclude them as quickly as possible.
37. The representative of the Republic of Korea noted PNG's recognition of the importance of
promoting sustainable development, but referred to bilateral issues raised in his country's written
questions concerning investment and fisheries.  He looked forward to receiving PNG's written
responses to these issues in the near future.
38. The representative of Japan sought clarific ation on changes to PNG's investment policies,
especially regarding the employment of overseas nationals.  He was encouraged that PNG was
reviewing its policies on protecting intellectual property rights, and sought additional details onproposed legislation, especially covering industrial  design and trade-marks.  Information was also
sought on PNG's policies for further liberalizing services, including investment and privatization.WT/TPR/M/62
Page 11
39. The representative of Papua New Guinea stated that the PNG Government was proposing the
provision of long-term entry visas from the current pe riod of three month, to up to thirty years, in line
with its APEC and WTO commitments.  He referred to current work on PNG's intellectual property
legislation with technical assistance from international agencies.  PNG encouraged foreign investment
in services.
40. The representative of the United States requested details on how the Copra Marketing Board
operated and of any plans to open this market to competition, and on the Government's policies to
promote the domestic food processing industry.
41. The representative of Papua New Guinea mentioned that the authorities were currently
considering ways of separating the copra marketing function from the Board and of opening the
market to competition.  Changes were likely in 2001.  Government policy was to promote domestic
food processing, including of imported produce, using mainly tax incentives for exporters of newgoods, and tariff protection.  No direct subsidies assisted downstream processing.
42. The representative of New Zealand sought clarification on the application of the quarantine
ban on fruit and vegetables.
43. The representative of Papua New Guinea indicated that this issue would be followed up in
their additional written responses.WT/TPR/M/62
Page 12
VI. CONCLUDING REMARKS BY THE CHAIRPERSON
44. 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 Trade and Industry,
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.
45. 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 natu ral 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 adjustmentcosts.  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 Trade Policy Review Mechanism.
46. 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, decliningworld 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.
47. 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 internatio nal 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.
48. 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;WT/TPR/M/62
Page 13
- 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 WTO Government Procurement Agreement;
- competition policy;
- public sector corruption;  and
- the deteriorating business climate, including the serious law and order problem.
49. 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, andnoted 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.WT/TPR/M/62
Page 14
ANNEX
ADVANCE WRITTEN QUESTIONS AND RESPONSES BY
THE DELEGATION OF PAPUA NEW GUINEA1
ECONOMIC ENVIRONMENT
Tax Reform
(Australia) –  The VAT came into force on 1 July 1999 largely replacing import duties.  How
successful has the implementation of the new tax been?
The new VAT is serving its purpose very well.  Although only in force for less than four
months, about 80% of the businesses which are liable to collect the tax have already registered.  The
VAT has replaced provincial sales taxes, and has been accompanied by a substantial lowering of tariff
rates.  The business community has been very supportive of the new tax.  There have been public
complaints of the inflationary impact of the VAT.  However, it is difficult to distinguish between the
inflationary effect of the VAT and that caused by devaluation of the kina and increases in controlled
prices.
After distribution to provinces (made to compensate the provinces for the revenue lost when
provincial sales taxes were eliminated), the VAT has proved slightly revenue positive.  That is to say,
revenue from the new tariff rates, plus VAT collected at the ports and inland, minus distributionsmade to the provinces, has resulted in a slight increase to central government revenue.
(Australia) –  In the mini-budget speech of August 1999, the Prime Minister announced the formation
of the taxation review to examin e the tax system in Papua New Guinea.  What will be the scope of
work for this review?
The Taxation Review will undertake a comprehensive review of those taxes which were not
directly part of the VAT/Tariff Reform Programme.  This will include excise taxes, personal and
corporate income taxes, and the fiscal regime as applied to mining, petroleum and gas production in
PNG.  The Review will report to the Prime Minister (and subsequently to Parliament) by
end-September 2000, so that recommendations might be considered in time for inclusion in the 2001
budget.  The Review is set to be independent and impartial, and will consult with industry, consumers
and Government.  External consultants will be used where specialized knowledge is needed (i.e. in
reviewing the fiscal regime for mining).
Multilateral and Bilateral Trading Arrangements
(Republic of Korea) – According to paragraph 124 of the Secretariat's Report, PNG does not intend
to join the Plurilateral WTO Agreement on Government Procurement until multilateral disciplines
covering procurement are developed.  However, Korea believes that PNG would benefit from joining
the current plurilateral agreement as it would not only enhance efficiency in PNG governmentprocurement but also better prepare PNG for eventual multilateral disciplines.
PNG maintains an open and transparent system of government procurement.  PNG supports
the multilateral trading system and ‘single underta king’ approach to trade agreements within the
WTO.  PNG will await the outcome of the up-coming negotiations on a multilateral agreement on
government procurement and transparency to decide its position on further commitments in this area.
                                                     
1 All references to pages and paragraphs relate to the Secretariat's report WT/TPR/S/62.WT/TPR/M/62
Page 15
(European Community) –  Could PNG provide an outline of what  commitments are covered under the
APEC Individual Action Plan (1997)?  (p. 35, para. 54).
The APEC Secretariat publishes summaries of the Individual Action Plans on the Internet, at
http://www.apecsec.org.sg/iap/iap.html.
(European Community) – We note that the status of nearly all of PNG's WTO notifications are
"outstanding" or "none received at all".  Is this due to problems with the notifications themselves or to
the absence of measures requiring notification?  (p. 31, para. 40).
Although there have been no measures requirin g notification, PNG acknowledges the need for
greater compliance in its reporting.  To this end, PNG is working with the Pacific Islands Forum
Secretariat and the WTO Secretariat to improve reporting.
(Hong Kong, China) –  It is reported by the Secretariat that some FTA initiatives involving PNG (e.g.
MSG Trade Agreement) would provide “only illusory trade liberalization and economic benefits tomembers.”  On the other hand, we fully share the assessment that MFN liberalization would create
and maximize economic benefits.  We would like to  know the PNG Government’s views on the report.
(p.37, para.68 & p. 40, para.76).
PNG believes that MFN liberalization is the most important foundation of its trade policy.
However it also believes that regional economic and trade integration is an important additional
policy.  PNG will benefit because of dynamic and scale economy effects which have not been
measured in studies to date.
Privatization(New Zealand) – The Secretariat Report notes that the incoming Government has indicated it would
implement a radical privatization programme aimed at raising between K 3 and K 5 billion to help
reduce public domestic debt.  (para. 126).  Could the PNG authorities provide an update on progress
with this programme, and an indicative time fram e for the next stages of the Corporatisation and
Privatisation Programme?
The current Government has reaffirmed its  commitment to the corporatization and
privatization programme by creating a Ministry of Corporatisation and Privatisation.  The
Privatisation Act was passed by Parliament in August this year.  The Act sets out the legal and
administrative framework under which the Government’s Privatisation Programme is to be
implemented.
Under the Act a Privatisation Commission has been established.  The Commission will meet
in late November in order to begin working on the White Paper on the policies and strategies to be
adopted by the Government.
(United States) –  We agree with the Secretariat Report’s comment that privatization would bring
greater efficiencies and competition to the benefit of both the government and the consumer.  Could
PNG provide an update regarding its Government's Privatisation Programme as outlined in
Table III.11 of the Secretariat's Report?
See above.
(Hong Kong, China) –  It is mentioned that the PNG authorities are considering the privatization of
ports which are currently run by the PNG Harbours Board.  We are interested to know more
information on the privatisation plan, such as the timetable and whether foreign investments would be
allowed.  (p. 120, para. 157).WT/TPR/M/62
Page 16
The PNG Harbours Board Management is currently collating data and is expected to make a
policy submission to the Board by the end of 1999.  The Board wishes to commence the
corporatization process in 2000.
(New Zealand) –  On what basis has the PNG Government estimated likely revenue from sales of
public enterprises?
The revenue from the sale of public enterprises has not yet been thoroughly analysed.  The
question will be referred to the Ministry of Corpor atisation and Privatisation, and written answers will
be made to the Secretariat in due course.
(New Zealand) –  What conclusions have been reached about the capacity of local investors to
purchase public assets, and does the PNG Government envisage any public reaction to proposals to
sell assets to foreign investors?
This question will be examined by the Privatisation Commission, and will clearly be an
important consideration when designing the Privatisation and Corporatisation Programme.
Foreign Investment
(Japan) – It is reported that studies conducted by the Foreign Investment Advisory Services (FIAS)
suggest that the transparency of PNG’s investment po licies could be improved, especially in the area
of approval procedures and criteria, the criteria  and use of investment incentives, and in investment
protection.  It is also reported that the new Natio nal Investment Policy in June 1998 is designed to
provide transparency, equal treatment, and consistency to investors.  The specific proposals under the
new policy are listed in paragraph 109, page 48, of the Secretariat Report.  Please explain concrete
measures taken or expected to be taken under the new policy:
- to improve transparency in the investment scheme (e.g. establishing a one-stop shop to
process investors more efficiently);
- to shift from a case-by-case approval process for foreign investments to a simpler
system of registration of businesses;  and
- to eliminate case-by-case ministerial discretion in approving investment incentives.
(pp. 44-48, paras. 101-111).
In 1998, the Government approved the National Investment Policy.  The policy is a response
to the need to liberalize and simplify the investment regime.  It aims to provide the transparency,
equal treatment and consistency required by the private sector, to enable it to make medium-term
strategic decisions to invest in Papua New Guinea.
Although there has been some progress in the implementation of the National Investment
Policy, notably the repealing of the Pioneer Industry Scheme and the review of investment incentives,
much of the agenda remains to be implemented.
The National Investment Policy commits the Government to modifying the Investment
Promotion Act, to shift from case-by-case approval of foreign investments (certification) to a simpler
system of registration of business, with ex-post monitoring of investments.
The National Investment Policy identifies the need to review investment procedures, under
specific pieces of sectoral legislation and make the procedures and requirements consistent with a
liberal approach to investment.WT/TPR/M/62
Page 17
In 2000, the Government will be reviewing the Immigration Act, in order to streamline
application procedures for visas and work permits.  In 1999, amendments to the Employment Act
were approved by Cabinet to allow enterprises flexibility in the payment of piece-rate wages,
particularly for export-oriented industries, and the legislative amendments will be made in 2000.
(European Union) –  Could the PNG Government indicate the nature of the proposed changes in its
national investment policy and when these alterations will take effect?  (p. 48, para. 109).
See above.
(Australia) –  Australian investment in Papua New Guinea has been limited by the "reserve list"
restricting investment in significant sectors to domestic investors.  We understand there are plansunder PNG's investment policy review to phase-out the re serve list.  Is this correct and if so how are
these plans developing?
The Investment Promotion Authority has completed a review of the Reserve Activities List.
A decision from Cabinet on a reduction in the scope of the list is expected in early 2000.
(Canada) – It is reported that foreign investors are expected to employ nationals in areas where the
required expertise exists.  It is however important to allow foreign experts to transfer management
skills and technologies by employing them.  What measures does PNG take to allow such transfer ofmanagement skills and technologies?  (p. 47, para. 108).
No written answer was provided at the meeting by the delegation of PNG.
Structural Adjustment
(Australia) –  Progress in Papua New Guinea’s negotiations with the IMF and World Bank on a
structural reform programme will be of centra l importance for Papua New Guinea’s future economic
development and for the restoration of business confidence in Papua New Guinea.  During its recent
mission to Papua New Guinea the IMF presented PN G authorities with an aide-memoire setting out
areas of agreement and areas where further progress was needed.  Areas requiring further progress
include a range of structural reform issues, such as privatization, public sector reform and Central
Bank legislation, and on the Rural Development Fund.  How does Papua New Guinea plan to
progress these outstanding issues and what is the expected timing for agreement with the
international institutions on a reform programme?
PNG is currently negotiating the terms of a letter of intent with the IMF and World Bank.  It
is expected that agreement will be reached shortly.
(European Union) –  PNG has a number of market-opening reforms in place:  Medium-Term
Development Strategy 1997-2002;  the 1999 Budget Economic Recovery Package;  and the tax and
phased tariff reform programme.  Whilst this is encouraging, the market-economic reforms have beenshort-lived or unfinished in the past (such as the Structural Adjustment Programme adopted in 1995).
Can PNG indicate when these vital reform s will be implemented?  (p. 15, para. 39).
PNG is in the process of implementing a number of market-opening reforms which will be
implemented in the 2000 budget.
Price Controls
(New Zealand) – The report notes that the Government has moved away from price regulation and
controls, believing that these distort markets and that plans exist to de-control prices on goodsWT/TPR/M/62
Page 18
representing 21% of the CPI basket.  (para. 136).  Within what timeframe is the PNG Government
intending to implement these plans?
The PNG Government has not yet established a timeframe for implementing further reforms
of price control.
(New Zealand) –  Do plans exist to de-control the remainder of items included in the CPI basket and
within what timeframe is it envisaged that these plans will be implemented?
There are at present no plans to de–control the remaining 9% of items in the CPI basket.
TRADE POLICIES BY MEASURE
Investment Promotion
(Canada) –  With regard to paras. 101 and 109, when will the Investment Promotion Act 1992 be
amended to ensure its consistence with the National Investment Policy released in June 1998?
The review of the Investment Promotion Act, to ensure consistency with the National
Investment Policy, is under way.  It is anticipated that the review will be completed by the end of
2000.
(Canada) – In light of the liberal and decentralized public procurement system for goods and services
in Papua New Guinea, what is the rationale for not becoming a signatory to the WTO Plurilateral
Agreement on Government Procurement?  (paras. 124-125).
PNG maintains an open and transparent system of government procurement.  PNG supports
the multilateral trading system and ‘single underta king’ approach to trade agreements within the
WTO.  PNG will await the outcome of the up-coming negotiations on a multilateral agreement on
government procurement and transparency to decide its position on further commitments in this area.
Tariffs
(New Zealand) – The Secretariat’s Report notes that the current average tariff on unprocessed
products is 16%, compared with 3% on semi-processed goods and 10% on fully processed products.In 2006 the average tariff rates will be 10%, 2% and 6% respectively.  Given PNG’s resource base,
this would tend to discourage processing of unprocessed products and, the Secretariat’s Report notes,
a more neutral tariff structure between different stages of processing would be economically more
efficient.  Can Papua New Guinea explain the rationale for its uneven approach to tariff escalation?
(para. 31).
This question is perhaps based on a misunderstanding of the tariff regime now in force in
PNG.  Any product which is produced in PNG in sufficient quantities to satisfy a large part of the
domestic market (more than 40% of domestic demand for the product) will receive tariff protection.
The level of the protection depends on the nature of the good.
An intermediate tariff will be applied to goods that are one company’s final product while
being an input to another company’s production.  The tariff will be reduced from 30% in 1999 to 15%
in 2006.
A protective tariff will apply to goods that are produced in PNG, but which are not inputs to
businesses.  The tariff will be reduced from 40% in 1999 to 25% in 2006.WT/TPR/M/62
Page 19
Very few products will receive a prohibitive tariff of 55% in 1999, reduced to 40% in 2006.
This rate is applied to goods which received high protection prior to 1999, mainly primary products
produced in PNG.
There are four products where tariff rates are governed by legal agreements between the State
and commercial enterprises.
Goods which are not produced in PNG are charged a zero rate of duty.Rather than discouraging processing of goods in PNG, the tariff regime encourages
production of goods in PNG, without biasing industry between primary and manufactured products.
(United States) –  We applaud PNG’s recent tariff reduction programme, which will help to simplify
the tariff structure and bring more competition into the marketplace.  In the past, high tariffs on
inputs have increased costs and inefficiencies in certa in domestic sectors.  Further tariff liberalization
will help to eliminate such inefficiencies and could attract new investment.  Will reduction take place
equally in all sectors, including agriculture, over the next seven years (i.e. from 2000-2006)?
Tariff reductions will be made on three dates after 1 July 1999.  These are 31 December 2000,
31 December 2002 and 31 December 2005.  On each date the tariff rate will be reduced by 5%.  Thus,
the 40% band in force on 1 July 1999 will become 35% at end-2000, 30% at end-2002 and 25% at
end-2005.  This will apply equally to all sectors, including agriculture.
(United States) –  Does the tariff reduction schedule and law provide an opportunity to re-examine or
accelerate duty reductions?  Does PNG intend to bind those tariffs that were immediately lowered to
zero?  Will PNG bind lower tariffs on rice?
See answers elsewhere in paper.
(Hong Kong, China) – It is mentioned that although the number of products left with relatively high
tariffs in 2006 will be relatively small, they co mprise a significant share of domestic production and
are likely to have a substantial impact on reso urce allocation and the economy's overall economic
efficiency.  Would the PNG Government share with us whether it has any plan to remove the
protection in these areas of domestic production with a view to enhancing resource allocation andeconomic efficiency?  (p. 56, para. 24).
See answer to previous question.
(Australia) –  Papua New Guinea retains arbitrarily high tariffs on some items, for example
flavoured milk. Will Papua New Guinea consider a reduction in the (40%) tariff on flavoured milk, in
line with the zero tariff on other dairy produce, to zero (although it is noted that the tariff on
flavoured milk will reduce to 25% in 2006)?
PNG is reviewing this tariff line.  The Papua New Guinea Government does not consider any
of its tariff rates "arbitrary".
(Japan) –  Does PNG have any intention to lower the high bound tariff rates of 55%, 75% and 100%
on a certain number of products?  (p.60, para. 32).
PNG is committed to a process of progressive liberalization.  However, at this time the
Government does not intend to re-examine bound rates.  PNG considers that a degree of policy
flexibility is essential in the administration of its tariff rates.WT/TPR/M/62
Page 20
(Australia) –  The Secretariat’s Report notes that "the tariff system has in the past been greatly
undermined by the widespread use of discretionary e xemptions".  What is the Government’s intention
with regard to commercial exemptions from trade and excise taxes?  Similarly, what is the
Government’s current policy towards concessions and incentives?
The previous PNG Government stated that no  commercial exemptions would be granted from
import duties.  This was accompanied by a revocation of all existing commercial exemptions.  The
new Government supports this policy, and will not entertain requests for exemptions from import
duties.
There is no legal power to grant exemptions from excise taxes to businesses.
(Australia) –  The Secretariat’s Report notes that the Industry Assistance Board (IAB) "has seriously
lacked the institutional capacity and government commitment to be effective".  Instead of applying to
the IAB for changes in tariff rates, companies have been approaching the Internal Revenue
Commission.  Are there plans to formalize a procedure for reviewing tariffs in the country?
The Taxation Review will examine the issue of the tariff setting mechanism.
(Japan) – It is reported that PNG does not set any minimum import or reference prices for customs
valuation, but that the fallback method, the valuation method applied of last resort, applies certain set
values.  (p. 63, para. 51).  Please explain the scheme of the "fallback value method".
The primary method of valuation for customs pur poses is the transaction method, that is the
actual price paid by the purchaser for the goods.  To that price is added the cost of freight, insurance,
handling charges and any hidden costs of acquiring the goods (if any).
The first fallback is the transaction value of identical goods in a sale for export to PNG.
The second fallback method is the transaction value of similar goods, adjusted for quality and
other differences.
The third fallback method is the deductive value, where the value is determined by the price
for which the goods are sold in PNG, adjusted by excluding PNG costs and mark-ups.
The fourth fallback method is the computed value, calculated by reference to the value of
materials used in making the goods, plus the costs incurred in the manufacturing process.
The final method is to determine the value of goods using the techniques from any of the
previous methods, but applying them in a flexible manner.  This method has as its aim to calculate a
value which is as close to the transaction method as possible.
The final fallback method is applied only very rarely in PNG, probably less than once a year.
(Japan) –  Is the "fallback value method" scheme which applies "certain set values" consistent with
Article 7:2(f) of the Agreement on Customs Valuation?
The fallback value method is consistent with Article 7 of the Agreement on Customs
Valuation.
(European Union) –  Which goods are covered by the PNG's system of preshipment inspection?  What
plans are there to phase out PSI ?  (p. 62, para. 48).WT/TPR/M/62
Page 21
The only product which is subject to preshipment inspection is unprocessed timber exports.
80% of all timber exports is subject to inspection to verify species and quantity.  There are no plans at
this point to phase out this preshipment inspection.
Standards and Testing
(Japan) –  We appreciate that PNG plans to develop a National Certification System of Conformity
Testing.  According to the report, PNG usually recognizes test results from reputable overseas
institutions.  (p. 73, para. 99).  Does PNG have prov isions regarding criteria for designation of such
overseas institutions?
PNG recognizes test results from overseas institutions in cases where a Mutual Recognition
Arrangement has been made.  Currently, only laboratories associated with the PNG Testing
Laboratory Accreditation Scheme and the National As sociation of Testing Authorities, Australia, are
recognized.
(Japan) –   It is also reported that exports from such suppliers have sometimes been required to
undergo PNG testing.  In which case is PNG testing required?
See above.
(European Community) –  With which countries does PNG intend to sign Mutual Recognition
Arrangements?  (p. 73, para. 99).
Answers will be provided to the Secretariat in due course.
(European Community) –  What is the current excise rate for spirits?  (p. 61, para. 43).
The excise rate on spirits is 110% of the ex-factory price, as of 1 July 1999.
(European Community) –  We note that the tax for imported spirits is calculated on the value of
individual products.  Why is the tax for domestic spirits based on an average?
Imported spirits are valued in accordance with the customs valuation procedures explained
above.  The tax on domestically produced spirits is based on an average of the first (lowest) sales
prices to non-related distributors.  An average is used because companies apply both a rebate and
discount system which is dependent on the purchased  amount of both the particular product as well as,
in some instances, other products the company is producing.
The excise tax regime will be examined by the Taxation Review.
Government Procurement
(Republic of Korea) – According to page 79, paragraph 125 of the Secretariat's Report, the PNG
Central Tenders Board must approve public procurement of goods and services worth over
K 500,000.  What are the criteria used and guidelines followed to approve tenders?  Are the same
criteria and guidelines applied to both local and foreign suppliers?
Less than K 300 – an officer having appropriate financial authority may arrange procurement
without quotations.  However, in order to ensure that  conformity is maintained, written quotations will
be taken whenever possible.WT/TPR/M/62
Page 22
Above K 300 up to K 5000 – an officer having appropriate financial authority may arrange
procurement by obtaining at least three quotations (verbal or written).  Again, written quotations are
encouraged.
Above K 5000 up to K 100,000 – at least three written quotations must be obtained by the
officer with appropriate financial authority.  If for any reason the lowest quotation is not accepted, a
written submission must be made to the Supply and Tenders Board.
Above K 100,000 up to K 200,000 – procurement must be by way of written invitations or by
Public Tender.  The Supply and Tenders Board has the authority to approve this category of
procurement when a written submission is made to  that Board.  The submission should recommend
the supplier but that Board has the authority to award, vary or outright reject all quotations/tenders.However, the Board must give reasons in writing for its action and the advice must be signed by the
Chairman of the Board.
Above K 200,000 up to K 5,000,000 – all procurement shall be by Public Tender and a
submission containing an evaluation report and a recommendation must be made to the Supply andTenders Board.  The appropriate Director must in the first instance forward a submission to the
Supply and Tenders Board nominating not less than three persons as proposed members for the
Tender Evaluation Committee, and seek the approval  of the Board.  This submission may be made
when the tender invitation has been advertised in or der to minimize the delay between the receiving of
Tender Bids and the submission of the evaluati on report and recommendation of the Board.  If the
lowest tender bid is not recommended reasons for non-recommendation of such bid must be clearly
set out.  The documents comprising the tender invitation, all tenders received, tender
evaluation/recommendation together with a covering letter signed by the appropriate Director must be
forwarded to the Supply and Tenders Board.  The Board may accept, vary or reject the
recommendation, but must advise the results of the decision in writing to the appropriate Director.This advice must be signed by the Chairman of the Supply and Tenders Board.
Above K 5,000,000 – bids above this amount must be in the first instance referred to the
Supply and Tenders Board, following the procedure laid out for items between K 200,000 and
K 5,000,000.  The Board must advise whether to refer the matter to Cabinet.  If such a
recommendation is made, and Cabinet agrees to review  the process, the necessary instruments will be
compiled by the respective responsible Officers for technical and for legal correctness for the award
before the Governor-General accepts the tender on behalf of the State.
Please note that the tender procedure does not distinguish between local and international
supplier.
Export Promotion
(United States) –  We would appreciate PNG's explanation on its tax policies and their relationship to
PNG's exports.  What kind of tax incentives, income tax holidays, special tax-write-offs and
depreciation provisions for income tax purposes does PNG provide for exports that are not granted todomestically consumed PNG products?
There are only two special tax incentives provided to exporters which are not granted to
domestic producers.  First is the double deduction for export market development, as outlined in the
Secretariat's Report (page 70).  Second is the exemption for export income.  For the first four years ofexportation of a prescribed product, an exporter may treat all income from export sales as exempt
(i.e. non-taxable) income.  For the next three years, any exports which exceed the average of exports
for the earlier years of the scheme will be treated as exempt.  There are no different depreciation
schedules.WT/TPR/M/62
Page 23
Intellectual Property
(European Union) – Can the PNG authorities confirm whether they will be on course to comply with
TRIPS by 2000.  What plans are there to enforce the protection of intellectual property rights, and
copyright and trade marks in particular?  (p. 79, paras. 120-123).
PNG is on course to comply with TRIPS by 2000.  For additional information, see above.
(United States) -  The Secretariat Report indicates that PNG has not yet developed significant IPR
legislation.  Strong IPR protection is a critical element to attracting foreign investment, particularly
in high paying industries.  Could PNG provide an update of the status of its IPR legislation and its
ability to meet its WTO obligations?
See above.
(Australia) – A draft law protecting patents and copyrights has been promoted by successive PNG
governments.  This has not been introduced to Parliament nor enacted as law.  Protecting intellectualproperty is an important international trade obli gation and important in protecting the revenue for
PNG's own creators.  When will the Government seek to enact copyright legislation?
Papua New Guinea intends to introduce a law on intellectual property rights.  There is already
a decision by the Cabinet to establish an Intellectual Property Rights Office to be housed within theInvestment Promotion Authority.  The Department  of the Attorney General and the Investment
Promotion Authority (Trade Marks Office) have been  working together drafting two bills (patent and
copyright), with the aim of introducing these bills to Parliament for enactment in 2000.
(Japan) – It is reported that PNG has little legislation to protect intellectual property rights, that there
is little or no enforcement of IPR, and that there are no provisions in the Customs Act nor in the trade
marks or copyright legislation to allow for seizure of imported goods that infringe intellectual
property rights.  According to the Report, the Government intends to adopt the necessary legislation
on intellectual property by 2000 and the Intellectual Property Office has been established to
administer new legislation to be introduced shortly on copyrights, and on patents, industrial designs,
and trade marks.  Please explain further on the legislation the Government intends to adopt as well as
on the expected schedule for adoption of such legislation.  (p. 79, paras. 120-123).
See above.
(Republic of Korea) –  The Secretariat's Report highlight on page 43 paragraph 95 that many aspects
of current legislation appear highly restrictive.  A lack of transparency and predictability in the PNGinvestment environment is said to hamper FDI infl ows.  Given that the PNG Government recognizes
the importance of FDI as it can “make an importa nt contribution to the country's development”
(Secretariat's Report, p. 42), how does it plan to improve the existing investment conditions?
See above.
SECTORAL POLICIES
Agriculture
(Hong Kong, China) –  We note that special conditions apply to imports of certain live animals into
PNG.  They may only be imported from Australi a and New Zealand.  Special conditions also apply to
animal products, some of which cannot be imported from countries other than Australia and New
Zealand.  It is mentioned that according to PNG authorities, quarantine regulations have been based
on risk assessment taking into account the relevant health status of the country of origin.  Would theWT/TPR/M/62
Page 24
PNG authorities share with us the reasons why impor ts of certain live animals are prohibited except
from New Zealand and Australia?  Is the prohibition based on and international standards or risk
assessments?  ( pp.73-74, paras. 101 & 104 & Table III.7).
This is incorrect.  Live animals may be imported from any country.  All imports of live
animals, animal products, plants and their products are subject to risk assessment.  Given the history
of importing animals from Australia and New Zealand risk assessments have been undertaken and are
continually reviewed.  PNG would welcome imports from other countries.
(United States) –  We note that PNG applies stringent quarantine regulations.  It concerns us that
imports of vegetables and fruit that are also grow n in PNG are banned outright or are open only to a
few countries.  The WTO SPS Agreement requires that any quarantine restrictions be backed up byscientifically based risk assessments.  Can PNG poi nt to the science-based risk assessments it has
performed which would justify its quarantine practices?  If no such risk assessments have been
performed, how does PNG otherwise justify these practices?
See above.
(European Union) –  Can PNG provide an explanation as to why there are many products (of certain
live animals) prohibited for imports, apart fr om Australia and New Zealand?  (pp. 73-74,
paras. 101-103).
See above.
(New Zealand) – The Report notes that imports of all veget ables and fruit that can be grown in PNG
are banned due to quarantine imperatives.  According to the report, PNG authorities assert that
quarantine regulations have been based on risk assessments taking into account the relevant health
status of the country of origin.  (paras. 103 & 104).  Can the PNG authorities clarify the process of
risk assessment which had produced this near total ban?
There is no complete quarantine ban.
(New Zealand) –  How often is the risk assessment programme reviewed?
A pest-risk assessment is currently being reviewed with assistance from the Secretariat of the
Pacific Community, funded by the New Zealand Government.
(New Zealand) –  Is there any process by which other governments and private businesses can raise
questions and concerns regarding specific parts of this quarantine ban?
There is no complete quarantine ban.
(European Union) –  Can PNG explain its current practice of banning the importation of all products
that can be grown in PNG (all fruit and vegetable s except onions)?  What happens when there is a
poor harvest?  Has PNG considered tariffication?
See above.
(Japan) – Does PNG have an intention to lower the high export tax rates on logs?  (pp. 65-66,
paras. 70-72, pp. 97-100, paras. 53-61).
The logging industry has been very actively lobbying for a review of the export taxes on logs.
The Government has not yet responded to the calls for a review of the industry, but is likely to make a
statement before the end of the year.WT/TPR/M/62
Page 25
(United States) –  This section of the Secretariat Report notes that, "Promoting domestic food
processing is also seen as important by the Government, and import-substitution policies based on
relatively high tariffs, which replaced import quotas and bans, have been used with limited success to
develop agriculture and agri-food processing industri es."  Could PNG further explain what it did and
continues to do to promote the domestic food processing industry?  Since high tariffs have been used
with limited success, does PNG have plans to lower tariffs further?  Has PNG determined to no
longer apply import quotas and/or bans?
PNG will lower tariffs in accordance with the Tariff Reform Programme.  Import bans and
quotas are no longer a part of PNG's trade instrume nts, and will not be used.  There are no special
incentives provided to the food processing industry, however, production of any good necessary tolargely satisfy domestic demand would result in tariff protection.
(United States) –  The Secretariat Report's later analysis of  agriculture, notes that high animal feed
tariffs hurt domestic livestock producers.  What is the schedule for lowering feed tariffs?
Currently, the schedule for lowering tariffs on stock-feed is as follows:  30% until end-2000,
25% from end-2000 until end-2002, 20% from end-2002 until end-2005, and 15% thereafter.  The
tariff line is, however, under review.
(United States) – Could PNG further explain how the Copra Marketing Board operates and what plan
it has to open up the market and actively increase competition?
Written answers will be provided in due course.
Transport
(Honk Kong, China) –  We note that the coastal shipping industry in PNG is heavily regulated by
cabotage policies.  Only PNG-registered vessels are permitted to operate in coastal waters and
overseas vessels are prohibited from carrying domestic cargo, except for heavy equipment or
specialized cargoes which cannot be carried by coastal vessels.  Does the PNG Government have any
plans to open its coastal shipping industry to foreign vessels?  (p. 120, para. 156).
In 2000 the Government will amend regulations and licensing procedures for coastal shipping
to allow foreign and domestic firms to compete in the provision of shipping services.  This will
increase efficiency and reduce shipping costs for PNG businesses.
(Japan) –  It is reported that the 1992 White Paper by the Department of Transport recommended that
controls on the number of vessels operating specific routes within PNG waters be abolished to
encourage new entry.  When does PNG plan to abolish the controls?  (p. 120. para. 156).
See answer above.
Telecommunications
(Hong Kong, China) –  We welcome PNG’s commitments on remo ving the monopoly for the provision
of a wide range of services in 2002.  We also note that it is PNG’s policy to gradually privatize the
two government-owned telecommunications servic es delivery companies (Telikom PNG and Post
PNG) by divesting up to 49% of the ownership.  We would like to know the progress of the
privatization plan.  (p. 121, paras. 164-165).
The Telecommunications Act 1996 provides for the government-owned Telikom PNG
Limited to be the exclusive telecommunications service provider in PNG until 2002.  This provisionWT/TPR/M/62
Page 26
only relates to telecommunications services and not to postal services.  There are no plans as yet to
privatize Telikom PNG.  However, privatization of Telikom PNG and other state-owned enterprises is
the subject of study by the recently established Privatisation Commission.
Financial Services
(Japan) –  According to the Report, the Motor Vehicle Insurance Trust recently merged with the PNG
Banking Corporation.  Is there any regulation in PNG which limits banks to provide other financial
services (e.g. life insurance, non-life insurance, security)?  (p. 122, para. 173).
Answers will be provided to the Secretariat in due course.
Fisheries
(Republic of Korea)  – The Secretariat's report mentions on page 103, paragraph 71 that PNG's
marine resources remain under-exploited and have considerable potential for commercial deep-sea
and near-shore fisheries.  It adds, in paragraph 72 of the same page, that PNG's waters containabundant supplies of tuna, as well as many other species.  The total annual sustainable fish catch is
estimated at 800,000 tonnes, compared with current catch levels of around 200,000 tonnes.  Given
this potential, it seems that the fishery sector co uld take a bigger place in the PNG economy.  Is the
PNG Government intending to better harness such potential?
Answers will be provided to the Secretariat in due course.
(Republic of Korea) – It appears that the PNG Government recently revoked the Fishing Access
Agreement signed on 9 July 1999 between Director of the Korea Deep Sea Fisheries Association and
the Minister for Fisheries of PNG.  The PNG Government justified this measure by arguing that thisagreement was not in line with its plan for tuna and not in conformity with its policy of maximization
of profit from tuna resources.  This measure thus jeopardizes fishing activities of Korean tuna fishing
vessels for the period of 1999-2000 within the waters of PNG.  When seen against the Secretariat's
findings on the unexploited potential of tuna resources, the justification provided for revocation of the
agreement between Korea and PNG should be reconsidered.
Answers will be provided to the Secretariat in due course.
(Republic of Korea) –  The negotiations for an Investment Promotion and Protection Agreement
between Korea and PNG were concluded in September 1999 and resulted on an agreed text.  Given
that the agreed text has yet to be ratified by PNG,  Korea would like to know more about the prospects
for such ratification in PNG.
Answers will be provided to the Secretariat in due course.
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