WORLD TRADE
ORGANIZATIONWT/COMTD/21
7 October 1999
(99-4204)
Committee on Trade and Development Original:  English
MELANESIAN SPEARHEAD GROUP TRADE AGREEMENT
Communication from Papua New Guinea
The following text reproduces the Trade Agreement among the Melanesian Spearhead Group
countries.
_______________
TRADE AGREEMENT AMONG THE MELANESIAN SPEARHEAD
GROUP COUNTRIES
PREAMBLE
The Government of the Independent State of Papua New Guinea, the Government of the
Solomon Islands  and the Government of the Republic of Vanuatu  (hereafter referred to as "the
Parties");
Conscious  of the overriding need to foster, accelerate and encourage the economic and social
development of their States in order to improve the living standards of their peoples;
Convinced  that the promotion of harmonious economic development of their States calls for
effective economic cooperation largely through a determined and concerted policy of greaterself-reliance;
Recalling  the Agreed Principles of Co-operation Among Independent States of Melanesia
signed by the Parties in Port Vila on 14 March 1988, wherein the Parties undertake inter alia  to
promote economic co-operation between States;
Determined  to foster closer economic and other relationships among their States and to
contribute to the progress and development of their three countries as well as the South Pacific Islands
region; and
Bearing in mind  the principles of international law governing relations between nations, such
as principles as sovereignty, equality and independence of all States and non-interference in the
domestic affairs of States.
Have agreed as follows:WT/COMTD/21
Page 2
Article 1
Definition and interpretation
1. In this Agreement unless the context otherwise requires:
(a) "Agreement means the "Trade Agreement among the Melanesian Spearhead Group
Countries" established by Article 2 of this Agreement.
(b) "Customs Duties" means import duties and other changes of equivalent effect levied
on goods by reason of their importation and includes suspended duties and fiscal
duties or taxes where such duties or taxes affect the importation of goods but does notinclude internal duties and taxes such as sales, turnover, consumption of service taxes
nor import levies and export tax.
(c) "Goods and Services" means goods and services specified in Schedule 1 of this
Agreement and shall include such other goods and services that may be included inthe said Schedule 1 by mutual Agreement between the Parties.
(d) "Party" means a State Party to the Trade Agreement.(e) "Persons" means a natural and legal person.(f) "Third Country" means any country other than a Party.
2. In this Agreement, unless the context otherwise require:
(a) the headings are inserted for convenience only and do not affect the interpretation or
construction of this Agreement; and
(b) words importing the singular include the plural and vice versa.
Article 2
Membership to Trade Agreement
Membership in the Agreement shall initially be opened to the Independent State of Papua
New Guinea, Solomon Islands and the Republic of Vanuatu.
Article 3
Objectives
1. The Objectives of the Parties in concluding this Agreement are:
(a) to promote and facilitate the free flow of identified goods and services;(b) to ensure as far as possible that trade between the Parties takes place under conditions
of fair competition; and
to contribute to the harmonious development and expansion of world trade and to progressive removal
of barriers thereto.WT/COMTD/21
Page 3
Article 4
General undertakings
1. The Parties shall make every effort to plan and direct their development policies with a view
to creating conditions favourable for the achievement of the objectives of the Agreement and the
implementation of the provisions of this Agreement and shall abstain from taking any measures likely
to jeopardize the achievement of its objectives and the implementation of its provisions.
2. The Parties shall extend the product coverage in this Agreement in order to ensure that the
duties and other restrictive regulation of commerce are eliminated on substantially all the trade
between the Parties.
3. Requests for such extension shall be presented by interested Parties in accordance with the
procedure laid down in Article 18.
Article 5
Most Favoured Nation Treatment (MFN)
1. The Parties shall accord to one another in relation to trade between them the most favoured
nation (MFN) treatment.
2. The provisions of paragraph 1 of this article shall not apply to:
(a) tariff preferences or other advantages granted by either Party consequent on the
membership of the Party in other free trade agreements or customs unions or oninterim agreement leading to the formation of another free-trade area or custom
union; and
(b) such measures as either Party may take pursuant to a multilateral international
commodity agreement or arrangement.
Article 6
Customs duties
1. Each Party should reduce and eventually eliminat e, in accordance with the provisions of this
Article; Customs Duties imposed on or in connection with the importation of goods specified inSchedule 1 to this Agreement imported from the territory of the other Parties.
2. The Parties shall not levy customs duties on goods appearing in Schedule 1 to this Agreement
in excess of the rates referred to therein.
3. The Annual Summit of Heads of Governments of the Parties shall, after considering proposals
from the meeting of Trade Officials convened in accordance with Paragraph 3 of Article 18 or from
other Technical Committees established pursuant to Paragraph 4 or the same Article, consider and
approve a programme for the progressive reduction of Customs Duties among the Parties with a view
to eliminating such duties.  Such a programme sha ll take into account the effects of the reduction and
elimination of Custom Duties on the revenues of the Parties.WT/COMTD/21
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Article 7
Quantitative import restrictions
1. The Parties shall neither maintain nor introduce quantitative import restrictions on trade in
products listed in Schedule 1.
2. Not withstanding the provisions of paragraph 1 of this Article, a Party may, after
consultations with the other parties reimpose quantitative import restrictions or introduce new
quantitative import restrictions on trade in goods listed in Schedule 1 of this Agreement, provided
such restrictions are imposed to prevent prejud ice to balance of payment in accordance with such
Party's international obligations.
3. At the request of any of the Parties consultation shall be held regarding the application and
effect of the restrictions referred to in paragraph 1 and 2 of this Article.  In the event that such
restrictions are interfering unduly, with conditions of fair competition the Parties shall in those
consultations consider appropriate measures to remedy the situation.
4. A Party which is maintaining quantitative import restrictions from the other Parties shall
ensure, to the extent permitted by its balance-of-payments, that the administration of such restrictions
is in conformity with the objective of the gradual elimination of barriers to trade between the Parties
to this Agreement.
Article 8
Quantitative export restrictions
1. Subject to the provisions of paragraph 2 of this Article, a Party shall not impose new
prohibitions or restrictions, or intensify existing prohibitions or restrictions on exports to the other
Parties.
2. A Party may take such measures as may be necessary to prevent evasion, by means of
re-export, of restrictions, which it applies in respect of export to third countries.
Article 9
Revenue duties or taxes
A Party may levy revenue duties or taxes or taxes on goods contained in Schedule 1 to this
Agreement imported from the territory of the other Parties, but such duties or taxes shall not be levied
at a rate higher than the rate to which such goods would be subject if produced or manufactured in the
territory of the importing Party.
Article 10
Deflection of trade
1. If in the opinion of a Party (hereinafter referred to as "the first Party") the import of any goods
specified in Schedule 1 of this Agreement from the territory of the other Parties causes or threatens tocause serious injury to its producers of like or directly competitive goods and the other Parties are
deriving advantage because:WT/COMTD/21
Page 5
(a) the duties or taxes by the other Parties on raw materials, intermediate products or
machinery, imported from a third country and used in the production of those goods,
are significantly lower than the duties or taxes levied by the first party on import of
similar raw materials, intermediate products or machinery, imported from third
countries, or
(b) the prices of raw materials, intermediate products or machinery, used in the
production of those goods, are unduly low by reason of dumping or subsidization by
third countries; or
(c) drawback, exemption or remission of import duties is allowed by the other Parties on
raw materials, intermediate products or machinery, imported from third countries andused in the production of those goods;
(d) then the first Party if it considers that action may be necessary to offset the advantage,
shall in writing request consultation with the other Parties on the situation which has
developed.  Such consultation shall be as full as circumstances permit, and the firstParty shall consider any measures taken or proposed to be taken by the other Parties
to offset the advantage.
2. Unless, in the consultation referred to in paragraph 1 of this Article, some alternative solution
acceptable to the first Party is found, the first Party may, in respect of the goods referred to inparagraph 1 of this Article, suspend the application of provisions of Article 6 and 7 of this Agreement
to those goods to such extent and for such time, as it considers necessary to offset the advantage,
provided that during any such suspension the first Party shall not levy on those goods revenue duties
or taxes higher than those which could have been levied prior to the entry into force of this
Agreement, or import duties at rates higher than the lowest rate applicable to imports of similar goodsfrom any third country.
Article 11
Development of industry
1. A Party after the consultation with the other Parties may for the purpose of encouraging new
productive activities which contribute to economic development, whether by the establishment of a
new industry or an extension of the range of commodities produced or manufactured by an existing
industry suspend for a period of 3 years the application of the provisions of Article 6 of this
Agreement and levy customs duties on goods contained in Schedule 1 to this Agreement which are
imported from the territory of the other parties and which are like, or competing with, goods producedby the new activities.
2. Duties shall not be levied under the provisions of paragraph 1 of this Article at a rate higher
than the lowest rate applicable to import of similar goods from any third country.
3. In exceptional circumstances and after consultation and renegotiations with other Parties a
Party may, for the purpose of establishing new industries or encouraging the expansion of established
industries, withdraw items from Schedule 1 to this Agreement.WT/COMTD/21
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Article 12
Temporary suspension of obligations
1. If as a result of the application of any of the provisions of Articles 6 and 7 of this Agreement,
goods contained in Schedule 1 to this Agreement are, in the opinion of a Party being imported into the
territory of that Party in such increased quantity and under such conditions as to cause or threaten
serious injury to its producers of like or directly competitive products, that Parties may in writing
request consultations with the other parties on measures to prevent future injury and shall consider
any measures taken or proposed by the other Parties.  For the purpose of this Article consultations
shall be deemed to have commenced on the day on which the request was made.
2. If the Parties do not reach a satisfactory solution on the matter within sixty days from the
commencement of the consultations referred to in paragraph 1 of this Article, the Party in whose
territory the goods are being imported may after giving notice in writing to the other Parties suspend,
to such extent and for such time as it considers necessary to prevent future injury to its producers of
like or directly competitive products, the application of those goods of all or any of the provisions ofArticles 6 and 7 of this Agreement.
3. In that event, the Party whose exports are affected may after giving notice in writing to the
other Parties suspend, for an equivalent period the application of all or any of the provisions of
Articles 6 and 7 of this Agreement to goods imported from the territory of the first Party the value ofwhich is equal to the value of goods affected by the measures taken by the first Party pursuant to the
provisions of this Article.
4. A Party taking action in accordance with the provisions of paragraph 2 of this Article shall
not levy on the goods referred to in that paragraph revenue duties or taxes of rates higher than thelowest rate applicable to imports of similar goods from any third country.
Article 13
Preferential treatment
1. For the purpose of this Agreement, goods shall be accepted as eligible for preferential
treatment if such goods:
(a) originate in the Parties in accordance w ith the rules of origin applicable to this
Agreement as set forth in Annex I;
(b) are specified in Schedule 1 to this Agreement.
Article 14
Suspension of obligations
1. Dumped or subsidized imports.2. If in the opinion of a Party goods being imported into it from the other Parties are being
dumped or are being subsidized by the other Parties so as to cause or threaten material injury to anindustry producing like or directly competitive goods or to materially retard the establishment of an
industry to produce like or directly competitive goods, it may request the other Parties to consult with
it on measures to reduce or prevent such injury or retardation.WT/COMTD/21
Page 7
3. If a mutually acceptable solution is not reached within sixty days of the date of the request
referred to in paragraph 1 of this Article, the Importing Party may, after giving notice to the other
Parties, suspend the application of Article 6 of this Agreement to the extent necessary to enable it to
levy dumping or countervailing duties on the goods concerned.
Article 15
Exceptions
1. Provided that such measures are not used as a means of arbitrary or unjustifiable
discrimination or as a disguised restriction on trade between the Parties nothing in this Agreement
shall prevent the adoption or enforcement by a Party of measures:
- necessary for the protection of its essential security interests;
- necessary to protect public morals;
- necessary for the prevention of public disorder or crime;
- imposed for the protection of its national treasures or artistic, historical,
anthropological geological, paleontological or archaeological value;
- necessary to reserve for approval purposes the use of the national and provincial costs
of arms, flags and seats;
- necessary to protect human, animal or plant life or health;
- necessary to protect its indigenous flora and fauna;- undertaken in pursuance of obligations in international commodity agreements;
- necessary to prevent or relieve critical shortages of foodstuffs or other essential
goods;
- relating to the conservation of limited natural resources;
- necessary to protect industrial property or copyrights or prevent deceptive practices ;- necessary for the application of standards or of regulations for the classifications,
grading or making of goods; or
- relating to the products of prison labour.
Article 16
Association with the Agreement
1. The Parties may agree to the association of any other member of the Melanesian Spearhead
Group or any other country, which is a member of the South Pacific Forum.
2. The terms and conditions of the association referred to in paragraph 1 of this Article shall be
negotiated between the parties and the other member of the Melanesian Spearhead Group or a
country, which is a member of the South Pacific Forum.
Article 17
Administrative Co-operation
The Parties shall, having regard to the desirability of reducing as far as practicable the
formalities required in connection with trade between them take appropriate measures, including
arrangements relating to administrative co-operation, to promote the effective and harmoniousapplication of the provisions of this Agreement.WT/COMTD/21
Page 8
Article 18
Institutional framework
1. The Parties shall utilize the existing Melanesian Spearhead Group Institutional framework for
the purposes of overseeing the implementation of this Agreement.
2. In accordance with paragraph 1 of this Article the Annual Summit of Heads of Governments
of the Melanesian Spearhead Group shall provide policy directions with respect to the implementation
of this Agreement.
3. Trade officials of the Parties shall meet annually prior to the Annual Summit of Heads of
Governments to jointly review trade among parties including goods not listed in Schedule 1 to this
Agreement with the review to inclusion of additional items in that Schedule.
4. The Annual Summit of the Heads of Government s may decide from time to time to establish
technical committees to oversee the implementation of specific fields of activity of this Agreementsuch as quarantine customs and trade.
Article 19
Consultation and review
1. In addition to the provisions for consultation elsewhere in this Agreement, consultation shall
take place between the Parties if a Party is of the opinion that any benefits conferred on it by this
Agreement are not being achieved and if it requests such consultation in writing.  In such
consultations, which shall take place as soon as practicable, the Parties shall consider appropriatemeasures to remedy the situation, which has prompted the request.
2. The consultations provided for in this Arti cle shall take place through the institutional
framework established under Article 18 of this Agreement.
Article 20
Notices
1. The Parties agree in addition to the provisions of Article 18 of this Agreement that any notice
or request required or permitted to be given or made under this Agreement and any Agreement
between the parties contemplated by this Agreement shall be in writing.
2. Such notice or request shall be deemed to have been duly given or made when it shall be
delivered by hand or by mail or facsimile to the Party to which it is required or permitted to be given
or made at its address hereinafter specified, or at such other address as such party shall have
designated by notice to the party giving such notice or making such request.  The addresses sospecified are:WT/COMTD/21
Page 9
For the Independent State of Papua New Guinea:
Secretary, Department of Trade & Industry
P.O. Box 375
WAIGANINew Capital District
PORT MORESBY,  Papua New Guinea
Telephone: (675) 325 6699/325 5351/325 5311
Facsimile: (675)325 4482/325 3302
For Solomon Islands:
Permanent Secretary
Ministry of Foreign Affairs
P.O. Box G10
HONIARA
Solomon Islands
Telephone: (677) 21250
Facsimile: (677) 20351
For the Republic of Vanuatu:
The Secretary
Department of Foreign Affairs
Private Mail Bag 051
PORT VILARepublic of Vanuatu
Telephone: (678)22913 or (678) 22347
Facsimile: (678) 23142
Article 21
Entry into force and duration
1. This Agreement shall be subject to ratification by the Parties and shall enter into force on the
thirtieth day following the day on which they exchange instruments of ratification
2. The Agreement shall remain in force unless terminated in accordance with the provisions of
paragraph 3 of this Article.
3. A Party which desires that this Agreement be terminated shall give to the other Parties notice
in writing of its desire and consultations shall then take place between the Parties as soon aspracticable.  If at the end of one hundred and eightieth (180
th) day from the day on which notice was
given, the Party which has given notice still desires that this Agreement be terminated and again gives
to the other Parties notice in writing to this effect , this Agreement shall cease to have effect on the
one hundred and eightieth (180th) day from the day on which the last mentioned notice is given.WT/COMTD/21
Page 10
SCHEDULE 1
A. For the purpose of Article 6, the tariff concessions granted by Papua New Guinea consist of
the following goods:
PNG Customs Tariff Description Rate of Duty
Meat of bovine animals:  Fresh or
chilled0
02.02 Meat of bovine animals:  Frozen 0
Tunas, skipjack and atlantic
bonito0
B. For the purpose of Article 6, the tariff concessions granted by Vanuatu consist of the
following goods:
Vanuatu Customs Tariff Description Rate of Duty
09.02 Tea 0
16.04 Canned tuna 0
C. For the purpose of Article 6, the tariff concessions granted by Solomon Islands consist of the
following goods:
Solomon Islands Tariff Description Rate of Duty
02.01 Fresh of chilled beef 0
02.02 Frozen beef 0
09.02 Tea 0
EXPANDED LIST OF PRODUCTS
The goods specified in the Schedule are goods imported from the Solomon Islands, Vanuatu
or Papua New Guinea, and are certified as originating from these countries in accordance with theRules of Origin prescribed in the MSG Trade Agreement as being exempt from import duty.
Tariff Heading Description of Goods
0101-0104 Live animals of all kinds
Meat of bovine animals, fresh or chilled
02.02 Meat of bovine animals, frozen
0203 Meat of swine, fresh or chilled
0204 Meat of sheep and goats, fresh or chilled
0206 Edible offals of animals
0208.90 Crocodile meat
0301 Live fish
0302 Fish, fresh or chilled
0303 Fish, frozen
0304 Fish fillet, fresh, chilled or frozen
0305 Fish, dried or salted
0306 Crustaceans, prawns, lobsters, etc.
0307 Molluscs, oysters, clams
0401-3020 UHT milk processed in retail packets
0403.10 YoghurtWT/COMTD/21
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Tariff Heading Description of Goods
0406 Cheese and curd
0409.00 Natural honey
0508 Shell honey
0701-0714 Edible vegetables and certain roots and tubers as classified
within these tariff headings
0801-0814 Edible fruits and nuts; peel of citrus fruits or melons as
classified within these tariff headings
0901 Coffee whether or not roasted or decaffeinated; coffee
husks and skins; coffee substitutes containing coffee in anyproportionTeaCoconut milk powderKava
Coconut oil
Canned beefCanned tuna
1902-30 Noodles (2 minutes)
1905.10 to 1905.40 Crisp bread, gingerbread and the like, sweet biscuits;
waffles and wafers, rusks, toasted bread and similartoasted products and other products in tariff heading 1905(but excluding cabin biscuits)
Jams, fruit jellies, marmalades, fruit or nut purée and fruit
or nut paste, being cookedIce cream (but excluding other edible ice)
2301 to 2309 Residues and waste from the food industries; prepared
animal fodderPortland cement
Liquid bleaches put for retail sales
MatchesPlastic shopping bags
4401 to 4421 Wood and article of wood
4601 to 4602 Manufactures of straw of espado or of other plaiting
materials, basked-ware and wickerworkToilet paperSteel tanks
Wire mesh chain mesh and barbed wire
Iron or steel nailsShips, or wood and steelFibre glass manufactured banana boatsWooden furniture of a kind used in officesWooden furniture of a kind used in the kitchen
Wooden furniture of a kind used in the bedroom
Other wooden furnitureFurniture of case, osier, bamboo or rattanPrefab steelWT/COMTD/21
Page 12
ANNEX I
Rules of Origin
For the purpose of this Agreement goods shall be accepted as originating in a Party if it has
been either wholly obtained or sufficiently worked or processed in a Party territory
The following shall be considered as wholly obtained in the Parties territories:- mineral products extracted from their soil or from their seabed;
- vegetable products harvested there;
- live animals born and raised there;- products from live animals raised there;
- products obtained by hunting or fishing conducted there;
- products of sea fishing and other products taken from the sea by their vessels;
- products made aboard their factory ships exclusively from products referred to in
sub-paragraph (f);
- used articles collected there fit only for the recovery of raw materials;
- waste and scrap resulting from manufacturing operations conducted there;
- goods produce there exclusively from products specified in subparagraph (a) to (l)
The following shall be considered as sufficient working and processing.When the product obtained is classified in a heading which is different from those in which
all the non originating materials used in its manufacture are classified, subject to paragraph 4.
The expression "heading" shall mean the 4 digit headings used in the Harmonized
Commodity Description and Coding System.
The following shall be considered as insufficient  working or processing to confer the status of
originating products whether or not there is a change of heading:
- operations to ensure the preservation of merchandise in good condition during
transport and storage (ventilation, spreading out, drying, chilling, placing in salt,sulphur dioxide or other aqueous solutions, removal of damaged parts, and like
operations);
- simple operations consisting of removal of dust, sifting or screening, sorting,
classifying, matching (including making up of sets of articles), washing, painting,cutting up:
(i) changes of packing and breaking up and assembly of consignments;
(ii) simple placing in bottles, flasks, bags, cases, boxes, fixing on cards or boards,
etc., and all other simple packaging operations;
(iii) affixing marks, labels or other like distinguishing signs on products or their
packaging;
(iv) simple mixing of products, whether or not of different kinds, where one or
more components of the mixtures do not meet the conditions laid down in this
Annex to enable them to be considered as originating products;WT/COMTD/21
Page 13
(v) simple assembly of parts of articles to constitute a complete article;
(vi) a combination of two or more operations specified in subparagraphs (a) to (f);(vii) slaughter of animals;
The preferential treatment provided for under this Agreement applies to products or materials,
which are transported directly between the territories of the Parties.
However, goods originating in the parties and constituting one single shipment which is not
split up may be transported through territory other than that of the Parties with, should the occasion
arise, transshipment or temporary warehousing in such territory, provided that the crossing of thelatter territory is justified for geographical reasons, that the goods have remained under the
surveillance of the customs authorities in the country of transmit of warehousing, that they have not
entered into the commerce of such countries nor been delivered for home use there and have not
undergone operations other than unloading, reloading or any operation designed to preserve them in
good condition.
(a) Originating products within the meaning of this Annex shall, on import into the
Parties benefit from the Agreement upon submission of a certificate of origin,
Form A, a specimen of which appears in Annex II, signed by the exporter and
certified by the Parties respective Customs Authorities.
(b) The exporter shall be prepared to submit a declaration setting forth all pertinent
details concerning the production or manufacture of the articles covered by the
certificates of origin upon request by a Party.  A declaration should only be requested
when a Party has reason to question the accuracy of the statement on a certificate oforigin or when a Party randomly verifies certificates or origin.
The parties shall agree to assist each other in obtaining information for the purpose of
reviewing transactions made under this Agreement in  order to verify compliance with the conditions
set forth in this Agreement
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