RESTRICTED
WORLD TRADE WT/TPR/S/24
13March 1997
ORGANIZATION(97-0973)
TRADE POLICY REVIEW
FIJI
Report bytheSecretariat
Thisreport, prepared forthefirstTrade Policy Review ofFiji,hasbeendrawn upbythe
WTO Secretariat onitsownresponsibility. TheSecretariat has,asrequired bythe
Agreement establishing theTrade Policy Review Mechanism (Annex 3oftheMarrakesh
Agreement Establishing theWorld Trade Organization), sought clarification from the
Government ofFijionitstrade policies andpractices.
Document WT/TPR/G/24 contains thepolicy statement submitted bytheGovernment of
Fiji.
Note: Thisreport issubject torestricted circulation andpress embargo untiltheendofthemeeting oftheTrade
Policy Review Body onFiji.Fiji WT/TPR/S/24
Page iii
CONTENTS
Page
SUMMARY OBSERVATIONS ix
(1) Economic Environment ix
(2) FijiinWorld Trade ix
(3) Legal andInstitutional Framework x
(4) Trade Policy Features andTrends x
(i) Type andincidence oftrade policy instruments x
(ii) Sectoral policies xii
(5) Trade Policies andForeign Trading Partners xiii
I. THE ECONOMIC ENVIRONMENT 1
(1) Introduction 1
(2) Recent Economic Performance 1
(i) Macroeconomic policies 4
(ii) Balance ofpayments andexchange rates 5
(3) Merchandise Trade Performance 6
(i) Commodity pattern oftrade 6
(ii) Regional pattern oftrade 8
(4) Outlook 8
II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES 10
(1) Institutional Framework 10
(2) Structure ofTrade Policy Formulation andImplementation 11
(3) Policy Objectives 13
(4) Laws andRegulations 13
(5) Trade Agreements andArrangements 14
(i) Multilateral agreements 14
(ii) Regional agreements 15
(iii) Bilateral agreements 17
(iv) Generalized System ofPreferences (GSP) 17
(v) Other agreements andarrangements 17
(6) Trade Disputes 17
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Page
III. TRADE POLICIES AND PRACTICES BYMEASURE 18
(1) Overview andRecent Developments 18
(2) Measures Directly Affecting Imports 18
(i) Registration anddocumentation 18
(ii) Tariffs andsurcharges 19
(iii) Tariff quotas 22
(iv) Other levies andcharges 23
(v) Preshipment inspection 24
(vi) Customs valuation 24
(vii) Import prohibitions andlicensing 24
(viii) State trading 26
(ix) Import cartels 26
(x) Standards andother technical requirements 26
(xi) Government procurement 27
(xii) Local-content requirements 28
(xiii) Rules oforigin 28
(xiv) Trade remedies 29
(xv) Measures implemented inexporting countries 29
(xvi) Other measures 29
(3) Measures Directly Affecting Exports 29
(i) Registration anddocuments 29
(ii) Export taxes, charges andlevies 29
(iii) Export prohibitions, controls andlicensing 29
(iv) Export quotas andvoluntary restraints 30
(v) Export subsidies 31
(vi) Duty drawback andtaxconcessions 31
(vii) Export finance andpromotion 33
(viii) Export processing zones 33
(ix) Other measures 33
(4) Measures Affecting Production andTrade 34
(i) Subsidies andother concessions 34
(ii) Assistance toresearch anddevelopment 35
(iii) Competition policy 35
(iv) Price control 35
(v) Corporatization andprivatization 37
(vi) Other measures 37
(5) Intellectual Property Protection 38
(i) Copyrights andrelated rights 39
(ii) Trademarks 39
(iii) Patents 40
Annex III.1 Foreign direct investment inFiji 41
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Page
IV. TRADE POLICIES AND PRACTICES BYSECTOR 43
(1) Overview 43
(2) Agriculture, Fisheries andForestry 43
(i) Sugar 45
(ii) Rice 47
(iii) Other agricultural products 48
(iv) Livestock anddairy farming 49
(v) Fishery products 50
(vi) Forestry 51
(3) Mineral Products 53
(i) Gold 54
(ii) Petroleum andpetroleum-related products 54
(4) Manufacturing 55
(i) Garments 56
(ii) Other manufactured articles 57
(5) Services 58
(i) Tourism 58
(ii) Transportation 59
(iii) Postal, telecommunications andaudiovisual services 62
(iv) Banking, insurance, finance andother financial services 63
REFERENCES 67
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CHARTS
Page
I. THE ECONOMIC ENVIRONMENT
I.1 Source oftaxrevenue, 1990 and1994 5
I.2 Product composition ofFiji'strade, 1990 and1995 7
I.3 Direction ofFiji'strade, 1990 and1995 9
II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES
II.1 TheMinistry ofCommerce, Industry, Trade andPublic Enterprises 12
TABLES
I. THE ECONOMIC ENVIRONMENT
I.1 Main economic andsocial indicators 1
I.2 Economic performance, 1980-95 2
I.3 GDP composition bysectoral origin, 1990 and1995 3
III. TRADE POLICIES AND PRACTICES BYMEASURE
III.1 Border charges, 1991-95 20
III.2 Main features ofFiji'sm.f.n. tariff, 1996 21
III.3 Excise taxes, 1996 23
III.4 Goods whose imports isprohibited intoFiji 25
III.5 Government procurement from foreign suppliers, 1995 28
III.6 Products covered byexport licensing 30
III.7 Basic statistics forTFF, 1988-94 32
III.8 TFFinvestment bysector, 1994 33
III.9 Depreciation allowances inFiji 34
III.10 Items under price control bythePrices andIncomes Board 36
III.11 FijiDevelopment Bank agricultural andindustrial loanapprovals,
1990/91 to1992/93 38
IV. TRADE POLICIES AND PRACTICES BYSECTOR
IV.1 Distribution ofpaidemployees, bysector, 1990-95 44
IV.2 Basic statistics foragricultural production, 1990-95 45
IV.3 Basic statistics forsugar industry, 1980, 1985 and1990-95 46
IV.4 Exports ofsugar byFiji 47
IV.5 Basic statistics forrice, 1990, 1992 and1994 48
IV.6 Basic statistics forcopra, 1990, 1992 and1994 48
IV.7 Basic statistics fortheproduction oflivestock andfisheries, 1990-95 50
IV.8 Sawn logproduction andexport earning from timber andtimber products, 1985-95 52
IV.9 Timber trade, 1985 and1990-94 53
IV.10 Production ofgoldandsilver attheEmperor Gold Mining Company, 1932-95 55
IV.11 Main destinations forFiji'sgarment exports,1989-95 56
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Page
IV.12 Quantitative limits onFiji'sgarment exports totheUnited States,
January 1996-December 1997 57
IV.13 Visitor arrivals bycountry, 1990-95 58
IV.14 Basic statistics forinternational airtraffic, 1991-95 61
IV.15 Keystatistics oftheinsurance market inFiji,1986 and1990-94 65
APPENDIX TABLES
Page
AIII.1 Products onwhich tariff concessions aregranted 71
AIII.2 Products covered bynon-automatic import licensing 73
AIII.3 Taxincentives bysector inFiji 74
AIV.1 Hotel occupation, 1990-95 77
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SUMMARY OBSERVATIONS
Introduction
1. Fijiisasmall, island nation inthe
South-Pacific whose economy relies strongly on
sugar, tourism andanewly emerged clothing
sector. Since thelate1980s, Fijihasfollowed
more outward-oriented polices, aimed at
achieving stable, sustainable growth. Although
important advances havebeenmade there has
beenacertain delay intheimplementation of
some structural measures, including tariff
reductions and public enterprise reform.
Confidence does notappear tohave fully
recovered from thecoups of1987; private
investment isstillwellbelow thelevel ofthe
early 1980s, and growth and economic
diversification remain somewhat hesitant.
(1) Economic Environment
2. Followingitsindependencein1970,Fiji
pursued astrategy ofimport substitution, self-
sufficiencyandheavyinvolvementofGovernment
inbusiness. Initially, economic performance
wasfavourablebut,reflectingthedistortionsand
rigidities induced byinward-looking policies,
growth became sluggish inthedecade to1986.
In1987, theeconomy suffered asevere setback,
largely inconsequence ofmilitary coups;
confidence deteriorated, there wasasharp
increase inresidents leaving Fijiandtourism
wasbadly affected.
3. Inlate 1987, Fiji undertook an
important change inpolicy direction toward a
moremarket-orientedoutward-looking
development strategy. Trade liberalization,
economicderegulationandinvestmentpromotion
are important components ofthenew
orientation. Thiscontributed toarecovery in
1989 and1990, ledbysugar, tourism and
clothing. However, withinvestment lagging,
growth slowed during the1990s, andrealGDP
increased atanaverage annual rateofabout
2.5percentintheperiod 1991-95.4. Fijihassought tosupport itsstructural
adjustment effort withimproved macroeconomic
management. Thebudget moved intosurplus
in1990 butreverted todeficit untilimproved
expenditure control andrevenue collection
brought itintoapproximate balance in1995.
Monetary growth hasbeen disciplined and
inflation wasintherange of5-8percentinthe
early 1990s, subsequently falling below 5per
cent. Inconsequence, thereal effective
exchange ratehasbeen relatively constant,
helping tomaintain export competitiveness.
5. Fiji'sgrowth prospects may be
constrained bylingering political andland-
tenure uncertainties, which playarôleinthe
lowerinvestmentandcontinuedemigration.The
Government isattempting toaddress the
investmentissuethroughstreamlininginvestment
procedures andgranting taxincentives; italso
seeks torebuild thelevel ofhuman capital,
aiming tophase incompulsory primary
education by2000. Therenewal oflandleases
inthesugar sector isapolitical andeconomic
issue which isaffected bytherelationship
between thetwoprincipal population groups.
(2) FijiinWorld Trade
6. Fiji'shistorical trade deficit hasbeen
largely offset byservices receipts, particularly
from tourism. Thebalance ofpayments has
beeninnearbalance, withreserves relatively
stable atwelloverfourmonths ofimports since
1993.
7. Reflecting lower investment, theshare
ofmachinery inFiji'stotalimports hasrecently
decreased, butmanufactures areup.Inthe
1990s, theshare offood products inFiji's
exportshasdeclined,whilethatofmanufactures,
ledbyclothing, hasrisen significantly. The
share ofsugar inFiji'sexports iscloseto40per
cent, withabout halfgoing tomarkets with
preferential access, mainly intheEuropean
Union.
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8. Fiji'simports aremainly fromAustralia
andNewZealand, withtheshare ofthelatter
increasing significantly inrecent years. About
halfofFiji'sexports gotoAustralia andthe
United Kingdom, withtheshare oftheUnited
States nowalsoimportant.
(3) Legal andInstitutional Framework
9. Fijiisamulti-party Republic, with
executive power vested inthePresident. The
Prime Minister, appointed bythePresident,
leads theGovernment; Cabinet formulates
policies.
10. ThemainFijian Ministries incharge of
issues relating tointernational trade arethe
Ministry ofCommerce, Industry, Trade, and
Public Enterprises (MCITPE) andtheMinistry
ofFinance and Economic Development
(MOFED). Except fortariffs, which arethe
charge ofMOFED, MCITPE isdirectly
responsible forFiji'sgeneral merchandise trade
policies, including anycontrols onexports and
imports. TheCustoms andExcise Department
(CED) inMOFED implements tariff policy.
Service-related policies areunder thepurview
ofvarious Ministries, including MOFED and
Tourism andCivilAviation.
(4) Trade Policy Features andTrends
11. Fijibecame amember oftheWTO in
January 1996. Itaccords atleastm.f.n. tariff
treatment toallitstrading partners. Aspart
ofitsundertakings intheUruguay Round, Fiji
bound allitsagricultural tariffs andsome
43percentofitsindustrial lines. Under the
General Agreement onTrade inServices
(GATS), Fijihasscheduled commitments in
tourism.
12. Fijiisasignatory totheLomé
Convention under which theEuropean Union
(EU) grants non-reciprocal trade preferences
tocountries inAfrica, theCaribbean andthe
Pacific (ACP States). EUaidtoFijiinthe
period 1989-1995 totalled F$75.5 million. Fijiisparty totheSouth Pacific Regional Trade and
EconomicCooperationAgreement(SPARTECA),
anon-reciprocalpreferentialagreementcovering
theForum Island Countries (FIC) andAustralia
andNew Zealand, which aims toachieve
progressively duty-free andunrestricted access
forFICinAustralia andNewZealand. Fiji's
export benefits under SPARTECA aremainly
frommanufactured goods suchasclothing. Fiji
isabeneficiary oftheGSP schemes of21
countries.
13. TheFijian authorities regard foreign
direct investment (FDI) asavitalcontributory
factor toachieving faster economic growth.
National treatment isthegeneral principle and
incentives aregranted equally toforeign and
domestic investors. Tofacilitate FDIinflows,
theFijiTrade andInvestment Board (FTIB) is
the"single window" forthepromotion,
regulation andcontrol offoreign investment.
TheFDIapproval process isdiscretionary, with
decisions made under ministerial guidelines
rather thantheprovisions ofanAct. Foreign
investors aregenerally discouraged from
acquiring controlling interest inestablished,
locally owned enterprises. Ifshares orother
securities ofbusinesses inFijiaretobeissued
toanon-resident, prior approval must be
obtained fromtheReserve Bank ofFiji(RBF).
(i) Type andincidence oftrade policy
instruments
14. Since1989,Fiji'straderégimehasbeen
liberalized andsimplified. Measures have
included theremoval oflicensing formost
imports, thereduction oftariff rates, anda
withdrawal ofsubsidies onsome primary
commodities.
15. Tariffs arenowthemaininstrument of
trade policy. Thetariff structure hasbeen
simplified, withthemaximum advalorem tariff
onalmost alllinesreduced from50percent
in1991to22.5percent,stillabove the20per
centoriginally envisaged. Fiji'scurrent simple
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Page xi
average m.f.n. tariff (excluding theeffects of
specific rates) in1996 was12.4percent. Ad
valorem tariffs areapplied toabout 96percent
oflines; specific ratesto2percent,mainly on
beverages, tobacco, mineral fuels, and
fireworks; remaining lines, largely tyres and
vehicles,aresubjecttoalternativerates.Border
charges accounted forsome 46percentofthe
Government 'sbudgetary revenue in1995.
16. Fiji'stariffshowsescalation,withhigher
rates onprocessed items. Most agricultural
tariffs arebound atceiling ratesof40percent,
except forrice, milk powder, alcohol and
tobacco products; bound rates inindustry are
at40percent. Most applied rates arewell
below thebound levels. Fijiaccords tariff
preferences tosome ofitsimports fromTonga
andPapua NewGuinea under bilateral trade
agreements, withrules oforigin applying. In
general, dutyconcessions aregiven toindustry
forthemanufacture ofrawmaterials and
machinery.
17. Customs valuation inFijiis,since
1January 1997, inaccord withtheWTO's
Customs Valuation Agreement. Fijihascertain
import prohibitions and controls for
environmental, health, public morals, and
security reasons, and under international
conventions. Specific import licence controls
have largely been removed since 1989, and
replaced bytariffs, except foritems suchas
lubricating oiltoensure compliance with
technical standards. There arenoquantitative
restrictions.
18. Fijiisintheearly stage ofdeveloping
itsownstandards.Policygoverningquarantine,
sanitary andphytosanitary regulations was
recently changed fromoneof"zero-risk" tothat
of"minimal risk", tofacilitate trade. In
government procurement, alltenders above
F$30,000areundercompetitivetendering,with,
inprinciple, nodiscrimination against foreign
suppliers.Fijihasnolocal-contentrequirements
fordomestic production, andithasnotusedsafeguards, anti-dumping orcountervailing
duties.
19. Forrevenue purposes, Fijiimposes
modest export taxesonsugar andgold. Export
controls aremainly applied forcultural, health,
orenvironmental reasons orunder international
conventions. Specific licences arerequired for
theexport ofsome products, including sugar,
wheat bran, copra meal, certain lumber, and
selected animals. Fijihasnoexport quotas or
voluntary export restraints, andaccording to
theauthorities, doesnotsubsidize, within the
meaning ofWTO obligations, anyexports of
goods orservices.
20. Duty drawback isavailable onthe
import component ofexported manufactured
goods ifthedomestic process changes theitems'
4-digit HSclassification. Allexports fromFiji
arezero-rated forVATpurposes. Firms are
exempt fromtaxonincome earned fromexports,
provided export value exceeds F$10,000 ayear.
TheTaxFreeFactory/Tax FreeZone(TFF/TFZ)
scheme grants financial concessions toattract
companies toestablish operations inFiji.
Export-performancerequirementsareassociated
with thegranting ofTFF status. The
concessions granted totheTFFs include the
duty-free import ofcapital goods, equipment,
components andrawmaterials usedtoestablish
them.TheExportCreditFinanceFacilityassists
exporters inobtaining pre-andpost-shipment
credit atconcessional rates ofinterest.
21. TherearenoproductionsubsidiesinFiji
butanumber oftaxconcessions aregranted for
investment andproduction. Forcompanies
deemed tobenewindustries, income tax
exemptions areforuptoeight years.
Accelerated depreciation concessions provide
benefits toallsectors other thanagriculture.
22. There isnospecific Competition Law
inFiji. Some 35percentofproducts arestill
subject topricecontrol. Privatization ofpublic
enterprises remains attheplanning stage.
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23. Fijifully intends toassure thatits
relevant legislation onintellectual property
rights isconsistent withtheWTO Agreement on
theTrade-Related Aspects ofIntellectual
Property Rights. Atpresent, theprovisions of
theAgreement areunder study toseewhether
changes areneeded.
(ii) Sectoral policies
Agriculture
24. Agriculture, forestry and fisheries
together account forabout 20percentofFiji's
GDP, andformore thanhalfofitsexports.
Sugar production andsubsistence agriculture
arethedominant agricultural activities. The
main government support measure for
agriculture istariffprotection. Exports offruit
andvegetables,includingrootcrops,aresubject
tolicensing. Licences aregranted forexports
ofspecific commodities, subject toquarantine
requirements andproduction lineinspections.
TheState owns several agricultural trading
companies. TheFijiSugar Corporation (FSC)
isthesolebuyerofsugarcaneandmanufacturer
ofrawsugar.
25. TheGovernmentactivelyencouragesthe
further processing ofraw materials in
agriculture.Individualsandcompaniesengaged
indesignated agricultural enterprises are
exempted from taxforfiveyears, mayoffset
losses against other profits andcarry forward
thelosses indefinitely untilcompletely setoff
against future profits. Landimprovement costs
may befully written offintheyear of
expenditure, oroveraperiod offiveyears. The
Government supports thecopra industry, which
isanimportant source ofexports, through a
pricestabilizationfund.Fijihasnoprogrammes
providing direct income support forfarmers or
foodsubsidies toconsumers.
26. Thesugar industry accounts forabout
40percentoftotalmerchandise exports and
11percentofGDP inFiji. Sugar production
increased during the1990s, although withconsiderable annual variations duetoclimate
anddisputes. About 90percentofrawsugar
isexported; more than halfissoldunder
preferential agreements, mostly totheEU.
27. Licensing protecting thedairy industry
frominternationalcompetitionwasremovedand
replaced bytariffs in1993. Thefisheries sector
holds about 1percentofGDP; taxconcessions
aregenerally available fordeep-sea fishing.
Canned tunaandchilled freshfisharethemain
exports. Theforestry sector adds1percentof
GDP. Exports aremainly ofsawn timber; log
exports arebanned.
Industry
28. Themining sector accounts forbetween
2to3percentofGDP and10percentof
exports. Gold isthemain mineral output. If
amining venture isdeemed beneficial forthe
development ofFiji,theincome derived from
suchactivity maybetaxexempt ortaxed ata
reduced rateforaspecified period.
29. Themanufacturing sector accounts for
approximately 12percentofGDP. Sugar
milling,food,beverageandtobaccoproduction,
andtextiles andclothing aretheprinciple
manufacturing activities. Themaingovernment
protection measure formanufacturing isthe
tariff. Themajor formofgovernmental support
isthrough taxexemptions forTFFs satisfying
export requirements.
30. ClothingisnowFiji'smain
manufacturing export. Some twothirds of
employment comes fromforeign firms. Clothing
production increased fivefold between 1986and
1995, assisted bytheintroduction oftheTFF
Scheme; exports havemorethandoubled since
thelate1980s, andaccount foralmost 30per
centofmerchandise exports. These exports
receive preferential access toAustralia andNew
Zealand under SPARTECA andtotheEUunder
theLomé Convention.
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Page xiii
Services
31. Servicestrade,especiallytourism,plays
animportant rôleinFiji'sexternal accounts.
Fiji'sSchedule ofSpecific Commitments under
GATS includes tourism and travel-related
services covering hotels, motels, other tourist
accommodationandrestaurants.Intheseareas,
Fijihasbound itselfnottolimitmarket access
ornational treatment forcross-border supply;
consumption abroad; andcommercial presence,
although there aresome limitations on
commercial presence inmarket access. Fijihas
notparticipated intheWTO negotiations on
basictelecommunicationsormaritimetransport.
32. Thetourism sector, together with
distribution, transport andcommunications,
accounts forsome20percentofGDP. Projects
forapproved hotel buildings orexpansion are
eligible foraninvestment allowance. Various
other incentives arealsogranted totourism.
33. Asanisland nation, Fijiisheavily
dependent ontransportation services. The
transport sector issubject toahighdegree of
regulation; inaddition totechnical andsafety
issues, prices areregulated inthebus,taxi,
domestic aviation and inter-island freight
industries. Route licensing applies todomestic
aviation andbusservices.
34. TheMinistryofInformation,
Broadcasting,TelevisionandTele-
communications issues telecommunication
licences andfrequencies andsetstheregulatory
environment.Domestictelecommunicationsand
postal services areexclusively provided byFiji
Posts andTelecommunications Ltd.(FPTL),
which iswholly owned bytheGovernment. Fiji
InternationalTelecommunication(FINTEL),with
51percent ofitsshares held bythe
Government, hastheexclusive righttoprovide
international telecommunications services. In
1990, both FPTL andFINTEL were issued
25-years licences tooperate asmonopolies.35. Thefinancial services sector accounts
foraround 13percentofGDP. Banking and
finance areregulated bytheReserve Bank.
Onlylicensed financial institutions, comprising
commercial banks andcredit institutions, may
engage inbanking. Foreign insurance
companies arenotpermitted toadvertise orsell
their activities inFiji. There isbasically no
limittoforeign ownership offinancial services
inFiji;however, theRBF encourages local
participation inmoney andforeign exchange
dealing fortravel related purposes.
(5) Trade Policies andForeign Trading
Partners
36. Under itsreform programme, Fijihas
taken thefirstsubstantial steps towards its
integration intotheworld economy. Trade
measures areapplied onanon-discriminatory
basis. Fiji'stariff bindings asaresult ofthe
Uruguay Round significantly increased the
predictability ofitstrade régime.
37. Fiji'seconomy depends heavily on
sugar, tourism andclothing. Theneedtolessen
thedependence onthesugar industry may
become moreurgent asFiji'spreferential status
initssugar export markets iseroded inthelong
term. Similarly, theclothing sector, alsofacing
anerosion ofpreferential access, could require
efficiency gains toremain competitive.
Diversification oftheeconomy will,however,
require attention totheproblem ofshortages of
professional andtechnical personnel thathave
resulted fromthehighratesofemigration over
thepast decade. The results ofthe
diversification attempt willalsodepend onthe
revival ofsagging investment. Expediting the
paceofprivatizationwillbehelpfulinupgrading
theefficiency oftheeconomy, aswilla
continued liberalization andderegulation effort.
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