PRESS/TPRB/54
11April 1997
TRADE POLICY REVIEW BODY
Review ofFiji
TPRB 'sEvaluation
TheTrade Policy Review Body oftheWorld Trade Organization (WTO) concluded itsfirst
review ofFiji'strade policies on9and10April 1996. ThetextoftheChairperson 'sconcluding
remarks isattached asasummary ofthesalient points which emerged during thetwo-day discussion.
Thereview enables theTPRB toconduct acollective examination ofthefullrange oftrade
policies andpractices ofeach WTO member country atregular periodic intervals tomonitor
significant trends anddevelopments which mayhaveanimpact ontheglobal trading system.
Thereview isbased ontworeports which areprepared respectively bytheWTO Secretariat
andthegovernment under review andwhich cover allaspects ofthecountry 'strade policies,
including: itsdomestic lawsandregulations; theinstitutional framework; bilateral, regional andother
preferential agreements; thewider economic needs andtheexternal environment.
Arecord ofthediscussions andtheChairperson 'ssumming-up, together withthese two
reports, willbepublished induecourse asthecomplete trade policy review ofFijiandwillbe
available fromtheWTO Secretariat, Centre William Rappard, 154ruedeLausanne, 1211Geneva 21.
Since December 1989, thefollowing reports havebeencompleted: Argentina (1992), Australia
(1989 &1994), Austria (1992), Bangladesh (1992), Bolivia (1993), Brazil (1992 &1996), Cameroon
(1995), Canada (1990, 1992, 1994 &1996), Chile (1991), Colombia (1990 &1996), Costa Rica
(1995), Côte d'Ivoire (1995), theCzech Republic (1996), theDominican Republic (1996), Egypt
(1992), ElSalvador (1996), theEuropean Communities (1991, 1993 &1995), Fiji(1996), Finland
(1992), Ghana (1992), Hong Kong (1990 &1994), Hungary (1991), Iceland (1994), India (1993),
Indonesia (1991 and1994), Israel (1994), Japan (1990, 1992 &1995), Kenya (1993), Korea, Rep.
of(1992 &1996), Macau (1994), Malaysia (1993), Mauritius (1995), Mexico (1993), Morocco (1989
&1996), NewZealand (1990 &1996), Nigeria (1991), Norway (1991 &1996), Pakistan (1995),
Peru(1994), thePhilippines (1993), Poland (1993), Romania (1992), Senegal (1994), Singapore (1992
&1996), Slovak Republic (1995), South Africa (1993), SriLanka (1995), Sweden (1990 &1994),
Switzerland (1991 &1996), Thailand (1991 &1995), Tunisia (1994), Turkey (1994), theUnited
States (1989, 1992, 1994 &1996), Uganda (1995), Uruguay (1992), Venezuela (1996), Zambia
(1996) andZimbabwe (1994).
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TRADE POLICY REVIEW BODY
Review ofFiji
CONCLUDING REMARKS BYTHE CHAIRPERSON
Overthepasttwodays, theTrade Policy Review Body hasconducted thefirstreview ofFiji's
trade policies andpractices. These remarks, made onmyownresponsibility, areintended to
summarize thesalient points ofthediscussion; theydonotsubstitute fortheBody'scollective
evaluation andappreciation, which willbereflected intheminutes ofthemeeting.
Thediscussion developed under three main themes: (i)macroeconomic andstructural
questions; (ii)general trade policy questions; and(iii)other specific areas ofconcern.
Inaddition toquestions raised during themeeting, several participants submitted anumber
ofquestions inwriting. Therepresentative ofFijiprovided extensive replies tothequestions andalso
undertook toprovide further details inwriting concerning specific issues.
Macroeconomic andstructural questions
Members highlighted Fiji'srelatively sloweconomic growth inrecent years andthechallenge
toFijiinachieving more rapid, sustainable development. Inthisconnection, questions wereraised
concerning thefiscal balance; progress inpublic enterprise reforms, which werewelcomed, andthe
promotion ofgreater competition intheFijian economy; theneedforatransparent, stable basis for
foreign direct investment; andremaining exchange andprice controls. Members alsoraised issues
concerning particular constraints onFiji'sdevelopment, such asquestions relating toskill
development, employment byethnic andgender groups, andlandtenure issues including changes to
theAgricultural Landlord andTenant Act.
Members referred tothehighdependency ofFiji'strade structure onasmall number of
products exported topreferential markets andtheconsequent effects thattheerosion ofexisting
preferences might haveonFiji'seconomy andtrade. They asked howFijiwould adjust tosuch
erosion and,inparticular, onmeasures toincrease domestic productivity andtodiversify export
products andmarkets.
Inreply, therepresentative ofFijistated thatFiji'seconomic performance inthe1990s had
indeed been modest; thiswasnevertheless animprovement overthevolatile fluctuations ofthe
1980s. Itshould beremembered thatFijihasspecial features including asmall market, frequent
natural calamities andisolation from major markets; these made itdifficult toemulate thegrowth
ratesofFiji'sAsian neighbours, although Fijiwasdrawing appropriate lessons from theeconomic
progress ofSouth EastAsian countries.
TheGovernment recognized theneedforfiscal consolidation andaimed toachieve abalanced
budget bytheyear 2000, both byrestraints onoperating expenditures andimproved revenue
collection. Indirect taxes nowaccounted for53percentofGovernment revenue, compared to22per
centfrom income taxes; thisstructure reflected adeliberate attempt toprovide incentives forhard
work andeffort. Fiji'strade account wastraditionally indeficit, reflecting inparttheimport of
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essential rawmaterials fortheproduction process. Thecurrent account hadhowever turned to
surplus in1996 andshould remain soforthenextthree years. Fijihadalsomanaged tokeepits
inflation ratelow,atabout 3percentatpresent.
Therepresentative noted nevertheless thatFijifaced adaunting taskinthefuture: in
particular, economic performance wasnotbroad-based anddomestic demand, especially investment,
remained subdued. Measures were being taken topromote investment, including Parliamentary
consideration ofanInvestment Bill,progress inresolving theconstitutional andland-lease issues,
incentives topromote hotel construction andarelaxation ofexchange controls. Hestressed thatFiji
mettheArticle XIIIrequirements oftheIMF, withnorestrictions oncurrent payments.
Therepresentative added thatFijiwould continue tooffer incentives toattract foreign
investment andwould alsofocus onimproving theinfrastructure suchasroads andcommunications.
Anumber ofspecific questions intheareas offoreign direct investment would require amore detailed
response, which would beprovided atalaterdate. Heemphasized thatthere were nobarriers to
foreign investment insugar-milling. HewentontonotethatthePublic Enterprise Actwasnowin
place, andimplementation wasbeing elaborated; healsoindicated thatseveral measures werebeing
taken topromote human resource development andeducation. Heemphasized that, while the
Government aimed toabolish price controls, there wasstrong political andlabour pressure fortheir
maintenance.
General trade policy questions
Members welcomed Fiji'smoves since 1989 tomore outward-oriented policies, with
elimination ofquantitative restrictions andreductions intheaverage leveloftariffs. Some members
drew attention totheslowing paceoftariff reform andimport liberalization; theyencouraged Fiji
tocontinue progress onthisfrontandinrelation toderegulation. Members alsonoted theescalation
oftariffs through stages ofprocessing, remaining tariff peaks onsuchproducts asprocessed riceand
motor vehicles, andtheapplication ofduties onbeverages andtobacco thatexceeded bound levels;
theysought information onthefuture direction oftariff reforms andanyparticular sectoral focus.
Some members asked about theimportance oftariff revenue forFijiinthelightofitsfiscal
imbalance. Inthiscontext, some sought information onFiji'spolicy regarding tariff exemptions and
concessions, noting thattherewassubstantial leakage ofrevenue through suchmeasures, which could
introduce additional distortions inthestructure ofprotection.
Questions wereasked about industrial promotion measures, including theuseofsubsidies and
export credits; questions were alsoposed regarding conditions ofoperation ofExport Processing
Zones, Tax-Free Zones andTax-Free Factories.
Members noted thatalthough Fijihadasyetnolegislation regarding trade remedies
(anti-dumping, countervailing andsafeguards), theFairTrading Decree wastobemodified toinclude
anti-dumping measures. Some Members asked whether theDecree would alsocover countervailing
measures andencouraged Fijitointroduce WTO-consistent provisions; however, oneMember
pointed outthatthere wasnoobligation under WTO provisions tointroduce suchlegislation.
OneMember asked ifFijicould ensure MFN andnational treatment forforeign suppliers in
government procurement andwhether Fijiintended tojointherelevant WTO Agreement.
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Questions wereasked regarding Fiji'sgrowing participation inregional trading arrangements,
including SPARTECA andtheMelanesian Spearhead Group. Thequestion wasasked whether Fiji
expected such agreements tocompensate forthelossofpreferential access inother markets.
Particular attention wasalsopaidtotheapplication ofrulesoforigin under regional andpreferential
agreements andtheireffects onFiji'strade.
OneMember andadiscussant raised questions regarding theapplication ofinternationally
recognized corelabour standards inFiji. Anumber ofothers stressed that, consistent withthe
Singapore Ministerial Declaration, suchquestions should properly beaddressed intheILO.
Inreply, therepresentative ofFijistated thatinpastnumber ofyears Fijihadconcentrated
itsefforts ontrade liberalisation through theremoval oflicences andthereduction intariffs. Tariff
reform hadslowed inrecent years, inrecognition ofthefactthattrade liberalisation needed totake
place inconcurrence withreforms inother sectors intheeconomy, including inlabour andcapital
markets andthepublic sector. Forthepresent, further tariff reductions would await theoutcome of
theDeregulation Policy Review, which hadbeencommissioned following recommendations ofthe
1994 National Economic Summit.
Onmore specific matters, therepresentative noted thattheapplication ofspecific rates of
duties onsome commodities were anattempt toprotect against revenue evasion byimporters. All
applied agricultural tariffs were below bound rates, withmost at22.5 percent. Thematter of
reducing applied rates onalcohol andtobacco totheirbound levels needed tobeconsidered inthe
context ofhealth, revenue andWTO timeframes. Thehighratesofdutyonmotor vehicles hadbeen
introduced toraiserevenue, butwere being reduced. Fijiintended toeliminate thedisparity inthe
excise dutyonlocally manufactured cigarettes withimported tobacco andthose withdomestically
grown tobacco. Licence control onbutter wasremoved in1995 andin1997 Fijiremoved
concessions andimport quota restrictions onpowdered milk. Further questions oncustoms
valuation matters, suchastheconfidential treatment oninformation andtheimporter 'srighttowritten
explanations, were being addressed intheprocess ofupdating legislation.
Onregional andpreferential arrangements, Fijihadsought arelaxation ofSPARTECA rules
oforigin buthadbeenunsuccessful. Abilateral arrangement withAustralia andNewZealand was
nowbeing explored andwasintended toassist Fiji'scompanies toultimately adjust toanopen, non-
preferential trading environment. Fiji'sbilateral arrangements with other South Pacific island
countries were partofitsoverall policy toharmonize andliberalize trade onaregional basis. On
wider regional interests, Fijiwaswatching developments withaviewtoaligning itstradereform with
APEC policies. Therepresentative alsonoted thatLomé andGSPdiscussions were nowunderway
andthatFiji'sposition would begiven atalaterdate.
Inrespect ofcorelabour standards, heemphasized thattheILOwasrecognized inthe
Singapore Ministerial Declaration asthecompetent body tosetanddealwith such standards;
questions raised inthismeeting should therefore bedealtwithbytheILO.
Other specific areas ofconcern
Members recognized thedependence ofFijionafewsectors, including agriculture, garments
andtourism. They sawanurgent needfordiversification within theagricultural sector, inparticular
away fromthepresent emphasis onsugar toencourage greater commercialization, diversification and
increased efficiency ofresource use. Agricultural policies should begeared tothese ends.
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Members asked questions concerning Fiji'ssanitary andphytosanitary (SPS) regulations;
while these appeared compatible withtherelevant WTO Agreement, specific issues were raised
concerning imports offruit, vegetables, flower seeds, foodstuffs, andvarious drugs and
pharmaceuticals. More generally, oneMember suggested thatFijishould, under theTBTAgreement,
baseitsstandards oninternational standards rather thanthose ofmajor trading partners such as
Australia andNewZealand.
Therelatively highleveloftariffs onfishwasnoted. Questions wereasked concerning Fiji's
management offishery resources andprohibitions onexports andimports under theFisheries Act.
Members posed questions regarding measures toencourage greater competitiveness inthe
clothing sector, which hadincreased itsimportance inexports.
Members recognized theimportance oftheservices sectors, particularly tourism andtransport,
toFiji. Thedevelopment ofanewpolicy statement bytheFijian Government onservices was
welcomed andfurther information wassought onthescope andexpected timing ofthestatement. It
wasnoted thatFijihadnotmade anoffer intheWTO Financial Services negotiations andthe
authorities were encouraged toparticipate actively intheresumed negotiations.
Onintellectual property, some Members welcomed thestepstaken byFijitoimplement anew
Copyright Act,consistent withtheTRIPS Agreement; information wassought onthepassage ofthe
Billthrough Parliament.
Inreply, therepresentative ofFijisaidthatachange initsSPSpolicy from zerotominimal
riskhadopened upthemarket forvarious agricultural products, including poultry, Written replies
would beprovided tothedetailed questions onfisheries. Although structural changes inthesugar
industry werebeing implemented, Fijiregarded theretention oftrade preferences asnecessary inthe
foreseeable future. Herecalled thatFijiSugar Corporation wasnotstate-owned, although amajority
oftheshares wereheldbytheGovernment; although FSCwasthepresent solebuyer ofsugar cane,
there wasnolegalmonopoly.
Henoted thatdiversification ofagriculture, which wasrecognized asimportant, hadtocoexist
withsugar, which wasFiji'smostviable crop; diversification towards manufacturing wasproceeding,
butagriculture remained themainstay oftheeconomy.
TheGovernment wascurrently seeking toimplement recommendations ofastudy ontrading
andskill development inrespect ofniche markets intheclothing sector. Hecontinued that
diversification ofexports intheservices sector wasalsoimportant totheGovernment andthatwork
towards aServices Policy wascurrently being undertaken.
Intheareaofintellectual property rights, adraftCopyright Billwasnowbeing examined in
consultation withWIPO andwasexpected tobesubmitted toParliament attheendoftheyear. Fiji
wascurrently consolidating itsrequest fortechnical assistance toalign domestic intellectual property
legislation withtheTRIPS agreement.
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Overall, Members welcomed theparticipation byFijiinthereview process, withastrong
delegation ledatMinisterial level. They welcomed thesteps already taken byFijitoward greater
transparency intrade policy andtheauthorities 'stated commitment tofreeandopen trade, and
encouraged Fijitocontinue along thepathofliberalization andderegulations. They emphasized the
importance ofdiversification oftheeconomy andtheneed fordevelopment tobepursued ona
sustainable basis. TheTPRB welcomed theanswers given byFijitoquestions andlooked forward
towritten replies onoutstanding issues.
END