RESTRICTED  
  
WT/TPR/G/409  
10 March 2021  
(21-1985) Page: 1/14 
Trade Policy Review Body   Original: English  
 
TRADE POLICY REVIEW  
REPORT BY  
TONGA 
Pursuant to the Agreement Establishing the Trade Policy Review Mechanism (Annex 3 of the 
Marrakesh Agreement Establishing the World Trade Organization), the policy statement by Tonga  is 
attached.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: This report is subject to restricted circulation and press embargo until the end of the 
first session of the meeting of the Trade Policy Review Body on Tonga . WT/TPR/G/409 • Tonga  
 
- 2 - 
 
  Contents  
1   SUMMARY  ................................ ................................ ................................ ...................  3 
2   ECONOMIC OVERVIEW  ................................ ................................ ...............................  3 
3   DEVELOPMENT FRAMEWORK  ................................ ................................ ......................  4 
3.1   Environmental and social challenges  ................................ ................................ .............  4 
4   TRADE POLICIES AND PRIORITIES  ................................ ................................ ............  5 
4.1   Trade policy  ................................ ................................ ................................ ...............  5 
4.1.1   Trade policy and non -communicable diseases  ................................ ..............................  6 
4.2   Trade facilitation  ................................ ................................ ................................ ........  6 
4.3   State -owned enterprises  ................................ ................................ .............................  7 
4.4   SPS, TBT, standards and quality infrastructure  ................................ ...............................  8 
4.5   Intellectual property rights  ................................ ................................ ..........................  8 
5   SECTORAL TRADE POLICIES  ................................ ................................ .......................  8 
5.1   Agriculture and forestry  ................................ ................................ ...............................  8 
5.2   Fisheries  ................................ ................................ ................................ ..................  10 
5.3   Seasonal offshore work  ................................ ................................ .............................  10 
5.4   Manufacturing  ................................ ................................ ................................ ..........  11 
5.5   Services  ................................ ................................ ................................ ..................  11 
5.5.1   Tourism  ................................ ................................ ................................ ................  12 
5.6   Offshore min ing................................ ................................ ................................ ........  12 
6   TRADE NEGOTIATIONS AND RELATIONSHIPS  ................................ ..........................  13 
6.1   Multilateral  ................................ ................................ ................................ ..............  13 
6.2   Regional  ................................ ................................ ................................ ..................  13 
7   CONCLUSION ................................ ................................ ................................ ............  14 
 
 
  WT/TPR/G/409 • Tonga  
 
- 3 - 
 
  1  SUMMARY  
1.1.  The Kingdom of Tonga became a member of the WTO on 27 July 2007. This is the country 's 
second Trade Policy Review (TPR), following its first in 2014. Tonga is a firm supporter of the 
rules-based multilateral trading system, which is of particular importance to very small economies 
that lack the administrative capacity to negotiate and maintain bila teral relationships with all of their 
trading partners. The Government of Tonga does not have a permanent representative in Geneva, 
and is represented in WTO matters by the Permanent Delegation of the Pacific Islands Forum (PIF) 
in Geneva, and by Tonga 's High Commission in London.  
1.2.  The period since the last TPR has been a challenging time for Tonga, due to a series of tropical 
cyclones that have had far -reaching social and economic effects. In particular, tropical cyclone Gita 
caused damage estimated at more  than a third of GDP in early 2018 — the highest proportional loss 
from natural disasters of any country that year. Tonga therefore felt the economic effects of the 
coronavirus pandemic while still recovering from previous shocks. Consequently, economic 
performance has been sporadic over the review period, with GDP growth averaging 2.4% in real 
terms, or 2.9% per capita, with sectors such as construction undergoing considerable fluctuation.  
1.3.  Notwithstanding these difficulties, the Government has made unprece dented progress in 
establishing a robust trade policy framework, and in negotiating regional market access 
arrangements. The Tonga Trade Policy Framework (TTPF), the country 's first comprehensive trade 
strategy, was launched in August 2020, with implementa tion just beginning. After Tonga 's 
ratification in March 2020, the Pacific Agreement on Closer Economic Relations Plus (PACER Plus) 
came into force in December, which will be Tonga 's most economically significant regional free -trade 
agreement by far. Techn ical assistance provided in relation to this agreement, and to the Trade 
Facilitation Agreement, has enabled the Government to implement a wide range of moderni zation 
steps that will further integrate Tonga into the global economy.  
2  ECONOMIC OVERVIEW  
2.1.  Tonga  has experienced fluctuating real growth since 2014, peaking at 6.6% in 2015/16, but 
averaging 2.4% between 2013/14 and 2018/19. Due to a slight population decline, these figures 
understate real per capita growth, which has averaged 2.9% over the same peri od. Real growth 
remained positive until the start of the coronavirus pandemic, but is expected to contract significantly 
during 2019/20 and 2020/21, by –2.9% and –5.8% respectively.  
2.2.  Growth since 2013/14 has been driven by 1.9% average annual growth in the industrial sector 
and 2.5% growth in services, while agriculture and fisheries have remained stable. Industrial growth 
was led by a 6% annual increase in the electricity, water and waste sector, and supported by sporadic 
construction growth, influenced by post-cyclone reconstruction. Manufacturing grew 1.2% per year. 
Several services sectors achieved average annual growth above 5%, including hospitality, transport 
and storage, professional, scientific and technical activities, wholesale and retail trade, 
administration and support, and health and social work. Although not measured as a distinct sector 
in national accounts, tourism has experienced particularly strong growth, based on a 12.5% average 
annual increase in visitor arrivals between 2014 and 2019.  
2.3.  At the time of writing, Tonga has avoided domestic cases of COVID -19 through strict border 
restrictions, but has nevertheless experienced a substantial downturn, following the suspension of 
the tourism industry and its knock -on effects on the economy. The G overnment also expects a 
contraction in remittances due to worsening economic conditions in countries with large diaspora 
communities.  
2.4.  Inflation has remained modest during the review period, although the small size of the economy 
means that supply -related price fluctuations are common, especially following natural disasters or 
economic shocks. Monetary policy remains accommodative, to support economic recovery.  
2.5.  The Government has achieved consistent budget surpluses from 2015/16 until the onset of the 
coron avirus pandemic. However, the Government 's fiscal position will be precarious in coming years, 
with the direct effect of supporting COVID -affected industries, a broader national and international 
weakening of economic conditions, and an expected spike in d ebt service payments in 2024. Under 
current conditions, it may be unrealistic to increase budget surpluses, and some drawdown of WT/TPR/G/409 • Tonga  
 
- 4 - 
 
  Government reserves is likely. The banking sector remains profitable, well capitali zed and relatively 
liquid, with few non -performing loans.  
3  DEVELOPMENT FRAMEWORK  
3.1.  Tonga is committed to the achievement of the Sustainable Development Goals (SDGs), and to 
embedding them as an integral part of the Government 's national planning and development 
framework. This is reflected in the count ry's 2019 Voluntary National Review (VNR) of SDG planning 
and progress, which was a fully country -led process.  
3.2.  In particular, the process helped to align the Tonga Strategic Development Framework 
(TSDF  II) 2015 –25 with the SDGs, the SIDS Accelerated Modali ties of Action (SAMOA) Pathway 2014 
and the Framework for Pacific Regionalism (FPR) 2014. This has had a number of benefits:  
• It has improved coherence  between planning at national, regional and international 
levels, ensuring that consistent priorities are reflected throughout.  
• The process has fostered inclusiveness , by providing an open, participatory and 
transparent process through which civil society could shape the way that international 
aspirations and goals are reflected in detailed national planning.  
• It has examined Tonga 's monitoring and evaluation needs, to locali ze SDG targets and 
indicators, building national capacity to collect data and strengthen statistical analysis, 
and improve monitoring through a national tracker database, which maps policy, planning 
and budget documents and their targets and indicators.  
3.3.  Ultimately, the benefit of this approach is reflected in the quality of planning at the sector and 
ministry level: it ensures that plans are interlinked in a coherent framework, and that minis tries' 
resource allocation and focus is in line with national priorities.  
3.4.  The TSDF II governs long -term national planning. It is structured around seven national 
outcomes: ( a) a dynamic, knowledge -based economy, ( b) urban and rural development, ( c) human 
development with gender equality, ( d) good governance, and strengthening the rule of law, ( e) 
infrastructure and technology, ( f) land, the environment and climate, and ( g) external interests and 
sovereignty.  
3.5.  Shorter term planning, including resource allocation, is governed by a three -year "Government 
Priority Agenda " (GPA), which is integrated into the annual budget statement process. The GPA is 
renewed annually, and by each incoming parliament. At the ministr y level, this is complemented by 
three -year corporate plans, which are also renewed annually. Longer term sector -level planning, 
including inter -agency cooperation and collaboration with non -government stakeholders, is reflected 
in a range of sector and th ematic plans, including the Private Sector Development Strategy and 
Action Plan (PSDSAP) 2018 –22, Tonga Trade Policy Framework (TTPF) 2017 –25, Tonga Agricultural 
Sector Plan (TASP) 2016 –20, and the Tonga Fisheries Sector Plan (TFSP) 2016 –24. 
3.1  Environmental and social challenges  
3.6.  Tonga faces a number of specific challenges that are significant for all levels of national 
planning, including in trade and private sector development policy.  
3.7.  Tonga remains in second place in the World Risk Index in 2020. This is not  due to a lack of 
preparedness — the index lists 69 countries worldwide that have lower resilience. Tonga 's position 
is determined by its extreme exposure to natural disasters and vulnerability to climate change. The 
links between natural disasters and tra de in Tonga were explored during the WTO 's third Symposium 
on Natural Disasters and Trade in May 2019, which included a case study and presentation on 
Tonga 's situation.  
3.8.  Tonga is particularly affected by tropical cyclones. The country experiences around two each 
year, of which on average one will be classed as a category 4 or 5 tropical cyclone. Cyclones cause 
varying degrees of damage and disruption, including to economic  activity and international trade. 
The country is currently recovering from tropical cyclones Gita (February 2018, category 5), WT/TPR/G/409 • Tonga  
 
- 5 - 
 
  Tino (January 2020, category 3) and Harold (April 2020, category 5).  Of these, Gita caused 
particularly severe damage, estimated  by the WTO Secretariat at 38% of GDP. Both reconstruction 
and improving the resilience of economic and trade -related infrastructure are permanent areas of 
Government work. Natural disasters are estimated to inflict an annuali zed loss of 4.3% of GDP.  
3.9.  In 20 20, the IMF 's Climate Change Policy Assessment (CCPA) estimated that the 
climate -resilience projects Tonga needs will cost 140% of GDP. So far, donors have committed to 
fund approximately half of this figure.  
3.10.   Non-communicable diseases have reached a critic al level in Tonga. The country has one of 
the highest rates of obesity in the world, and 99.9% of Tongan adults aged 25 –64 are at moderate 
to high risk of developing an NCD. The policy response requires a multi -sectoral approach to address 
all causal facto rs, and is led by a taskforce which coordinates the Government 's overall response, 
including coordinating the work of subcommittees that focus on physical activity, alcohol, healthy 
eating and tobacco control.  
4  TRADE POLICIES AND PRIORITIES  
4.1  Trade policy  
4.1.  The review period has been a transformative time for trade policy in Tonga. Since 2014, the 
Government has developed its first trade policy framework, finali zed in August 2020 with the support 
of the Pacific Islands Forum Secretariat (PIFS), the International  Trade Centre (ITC), and the 
Commonwealth Secretariat, and its second private sector development strategy, finali zed in 2018 
with the support of the Asian Development Bank (ADB), which together provide an improved 
long-term planning framework that will adv ance national development by maximising the impact of 
the private sector.  
4.2.  Creation of the Tonga Trade Policy Framework (TTPF) 2017 –25 has been a high priority for a 
number of years, and it has been under active development since 2016. The TTPF is structure d 
around four pillars. The first, industrial and investment development, aims to improve the productive 
capacity of Tongan businesses, both to increase export competitiveness and compete with imports 
in the domestic market. The second, export development a nd trade facilitation, focuses on increasing 
and diversifying Tongan exports. The third, development of trade -supporting institutions and 
services, will establish an explicit framework for public –private dialogue (PPD). The final pillar, 
inclusivity and ci tizen economic empowerment, will ensure that implementation of the TTPF will be 
fully supportive of and aligned with the Government 's broader policy agenda, including the TSDF II 
and SDGs.  
4.3.  E-commerce has been identified as a particular area of trade policy  in which more work is 
needed. The Government developed a National E -commerce Readiness Assessment (NERA) with the 
support of the PIFS, and launched it alongside the TTPF. This is being followed by a 12 -month 
programme to implement four policy priorities i dentified by the NERA with support from Australia.  
4.4.  The Government recogni zes the strategic significance of the Tongan diaspora, especially in 
Australia, New Zealand and the U nited States, as a source of investment finance, and aims to initiate 
an annual co nference and other events to foster closer business linkages and share experience. 
There is also a need to diversify away from dependence on traditional export markets, and the 
Government again envisages that diaspora communities in the U nited States and E urope will prove 
an important asset in achieving this. The Government is also supporting manufacturers ' participation 
in trade shows and exhibitions to gain familiarity with key requirements of new markets. Given 
Tonga 's limited diplomatic network overseas , the PIFS ' Pacific Trade Invest (PTI) network represents 
an important platform for the promotion of Tonga 's exports, with offices in Auckland, Beijing, 
Geneva, Sydney, Tokyo and Suva.  
4.5.  The ratification and implementation of PACER Plus is a landmark step fo r Tonga, and has laid 
the foundations for accession to and implementation of other FTAs — namely the interim Economic 
Partnership Agreement (IEPA) and the Pacific Island Countries Trade Agreement (PICTA). The 
Government intends to complete the necessary do mestic requirements to declare Tonga 's readiness 
to trade under PICTA, once PICTA reforms have been undertaken. Tonga notified the European Union 
(EU) of its interest to accede to the IEPA in 2018, but work is still underway to complete domestic WT/TPR/G/409 • Tonga  
 
- 6 - 
 
  requiremen ts that would enable accession. Tonga has been closely involved in the negotiation of a 
post-Cotonou partnership agreement with the EU, and looks forward to acceding upon completion 
of the formalities. The Government also plans to thoroughly assess the imp lications of joining the 
UK–Pacific Economic Partnership Agreement (EPA) between the UK, Papua New Guinea and Fiji.  
4.6.  The Private Sector Development Strategy and Action Plan (PSDSAP) 2018 –22 is closely aligned 
with the TTPF, especially in the Government 's strategy for larger firms who export, have export 
potential, or compete with imported products. However, the PSDSAP also addresses the needs of 
smaller firms, including informal and micro enterprises.  
4.7.  Both the TTPF and the PSDSAP respond to the private secto r's calls for more structured and 
in-depth PPD. The third pillar of the TTPF will establish a standing trade policy committee to oversee 
implementation of the TTPF. Drafting terms of reference for the committee is a priority for the 
Ministry of Trade and E conomic Development (MTED). Both the TTPF and PSDSAP include measures 
to increase openness, including consulting during formulation of trade laws and regulations, and 
providing time for internal consultation within the private sector 's apex organi zations.  
4.8.  MTED 's Corporate Plan 2020/21 –2022/23 provides greater detail on how the strategic priorities 
of the TTPF and PSDSAP are translated into operational actions by MTED. It covers a three -year 
planning horizon, but is updated annually.  
4.1.1   Trade policy and non -communicable diseases  
4.9.  During the review period, the Government has taken substantial steps to recogni ze and address 
the damage caused in Tonga by non -communicable diseases (NCDs). Tonga has one of the highest 
rates of obesity in the world, and 99.9% of Tongan  adults aged 25 –64 are at moderate to high risk 
of developing an NCD. This prevalence represents an urgent risk to human health, and internationally 
traded products, including unhealthy foods, tobacco and alcohol, are an important causal factor. The 
Govern ment has therefore incorporated significant trade policy measures into its coordinated 
response, in implementing its National Strategy for Prevention and Control of NCDs 2015 –20. 
4.10.   While the urgency of the health threat forced the Government to take immediat e action, the 
Government has also recogni zed that domestic firms supplying products affected by the new policy 
require time to adjust. As a result, the Government has taken a dual track approach, with restrictions 
to protect health being introduced more qu ickly for imported than for domestic products. 
Unfortunately, despite this approach, some domestic firms have already been forced to close. 
However, public health remains the paramount priority, and the Government continues to work to 
bring restrictions on  domestic production and sale broadly into line with those for imports.  
4.11.   In 2019, the World Bank published an evaluation of the Government 's efforts to control NCDs, 
including through trade policy, and the Government intends to incorporate these lessons int o future 
policy -making. The World Bank is also assisting the Government to develop a nutrient profiling (NP) 
model for Tonga, which will guide future regulatory reform and policy -making in the area.  
4.2  Trade facilitation  
4.12.   In November 2020, MTED and national st akeholders agreed an Implementation Roadmap for 
the Trade Facilitation Agreement (TFA). The Government has identified implementation priorities, 
and established a performance and monitoring mechanism to ensure the Roadmap 's full 
implementation.  
4.13.   In 2020, the Government of Tonga completed its first ever time release study, with the 
support of the World Customs Organisation (WCO). This has provided an invaluable evidence base 
for future reform efforts, including improved risk management, ensuring that the Government is 
able to target measures that will have the greatest impact.  
4.14.   The Ministry of Revenue and Customs (MORC) has recently begun the process of shifting from 
an outdated, bespoke system to ASYCUDA World, with technical support from UNCTAD and fi nancial 
support through the PACER Plus Readiness Package. The migration is expected to be completed in 
2022. Alongside this, Customs is in the process of upgrading its computer hardware and connectivity 
between its airport and wharf operations, including o n the outer islands. Among other benefits, this WT/TPR/G/409 • Tonga  
 
- 7 - 
 
  will enable many customs -related tasks to be done online, including lodgement of declarations and 
manifests, and submission of payments, which in turn will speed up border clearance and eliminate 
paperwork. T his will be an important step in the implementation of the TFA.  
4.15.   The Government has been working with various donors to introduce x -ray scanning capability 
at the main port in Nuku 'alofa, which should improve clearance times and customs compliance. This 
has been set back by the coronavirus, but MORC has been working to establish the necessary 
procedures to make full use of this capability once it is installed.  
4.16.   MORC is in the process of implementing additional programmes including an "Authorised 
Economic Oper ators" (AEO) programme for highly compliant importers, to reduce clearance times 
and costs to Government, and streamlined inspections in collaboration with line ministries for 
agriculture and fish. The Government is also implementing the "Tonga Trade Porta l", a trade 
facilitation platform that provides easy online access to import and export requirements. UNCTAD 
has provided technical support for the development of the platform, with funding provided by 
Australia and New Zealand under the PACER Plus Readine ss Package. In the context of COVID -19, 
the World Bank has provided support to develop a policy to expedite shipment of medicines and 
medical supplies.  
4.17.   The implementation of PACER Plus has required the Government to develop new regulations 
to administer ru les of origin (ROO), and the Oceania Customs Organisation (OCO) has assisted MORC 
in developing a detailed manual to guide implementation of these rules. Australia and New Zealand 
have trained a number of MORC officials to provide training to stakeholders in Tonga.  
4.3  State -owned enterprises  
4.18.   Tonga is the smallest of the Pacific WTO Members in terms of both population and GDP. In 
common with most small island developing states (SIDS), state -owned enterprises (SOEs) play an 
important role in the economy. There are many reasons for this. At this economic scale, many more 
markets are characteri zed by monopolistic or oligopolistic conditions, and yet complex regulation of 
anti-competitive practices carries high fixed costs and capacity demands. To maintain a rightsized 
public sector, the Government often needs to take a simpler approach to regulation than would be 
appropriate in much larger economies. Additional challenges, such as the need for economic 
operators to provide equally for the needs of remote popu lations on outer islands, even when this is 
not profitable, and to rebuild from frequent natural disasters, mean that SOEs are often the simplest 
means of achieving a complex set of objectives.  
4.19.   The ADB has repeatedly found that the SOE sector in Tonga is a mong the most profitable of 
small island developing states in the Pacific (in terms of return on assets and equity), and even 
compares favourably to some developed countries in the region. At the time of the latest comparison, 
SOEs in Tonga had the second -highest contribution to GDP of the islands covered. The effectiveness 
of Tonga 's SOEs has been recogni zed by other Pacific islands, and the Government has provided 
advice to regional neighbours considering their own SOE reforms during the review period.  
4.20.   Nevertheless, the Government takes a pragmatic approach to SOEs, recogni zing that there 
are always opportunities for improvements in efficiency and service delivery, and as economic 
conditions change there is a constant need to review whether the Government 's SOE portfolio is 
optimal. Within the Ministry of Public Enterprises, these tasks are divided between two divisions. The 
objective of the Monitoring, Compliance and Reporting Division is to continually assess the 
performance of SOEs, and identify opportun ities for improvements and cases in which structural 
review is needed. The Rationalisation, PP and Special Projects Division manages the structural 
change of SOEs where this is identified as necessary, including privati zation and the creation of 
public –private collaborations. The ADB has provided valuable support to the Government in both 
ongoing assessment of the SOE sector and the implementation of reforms where necessary.  
4.21.   The Government has a number of priorities for reform. One is to establish a public –private 
partnership for the stevedoring operation currently managed by Ports Authority Tonga (PAT). A 
second is to reconstitute the three commissions into state -owned companies, under the Company 
Act 1995. The main purpose of this reform is to provide grea ter flexibility to the Government to 
make ownership adjustments by selling shares or part -privati zing. WT/TPR/G/409 • Tonga  
 
- 8 - 
 
  4.22.   During the review period, the Government has established a "shared board " system, under 
which boards of directors for different SOEs within each sector ( such as utilities or transport) share 
members. This has substantially improved coordination among related enterprises. Ultimately, the 
Government aims to shift to a more consolidated legal structure, such as a collection of holding 
companies, but recogni zes that the variety of acts under which SOEs have been incorporated will 
mean that this process will require lengthy legislative reforms. The Government aims to start this 
process in the utilities sector.  
4.4  SPS, TBT, standards and quality infrastructure  
4.23.   The G overnment 's regulatory framework on SPS and TBT largely predates its accession to the 
WTO and is in need of moderni zation. The regulatory framework for quality and standards is 
piecemeal and insufficient, consisting of isolated standards and provisions in several laws, such as 
the Food Act 2020, Consumer Protection Act 2016 and Building Control and Standards Act 2016. 
There is no national body with responsibility for standards, standardi zation or certification, which 
increases costs for exporters. Standards  that have been established in law are generally based on 
international or regional standards. A review of these areas began in 2020, in particular to identify 
instances where the real costs to exporters or consumers are significant, to enable prioritisati on of 
reform. In February 2020, Pacific Island Forum Trade Ministers, including Tonga, endorsed a Pacific 
Quality Infrastructure Initiative to promote regional cooperation on standards, metrology, 
accreditation, conformity assessment (testing, certificatio n, and inspection), and other 
quality -related issues.  
4.5  Intellectual property rights  
4.24.   Tonga 's intellectual property (IP) system is managed under the Business Registry and 
Intellectual Property Division within MTED. The IP Unit 's target outcome is to create an  innovative 
and creative IP environment that strengthens business competitiveness and increases demand for 
IP services. The priorities of the IP Unit are monitoring the utilisation of the IP system that is 
currently in place to ensure that it is implemente d effectively, and conducting awareness 
programmes on IP rights to ensure that local businesses and the general public are aware of their 
rights.  
4.25.   In 2018, an association for music rights holders was established, whose role is to oversee the 
concerns and m anage the rights of its members. It aims to establish a collective management 
organi zation (CMO) specifically for music.  
4.26.   A national intellectual property strategy was developed and implemented in 2015 –17, and is 
now due for review. The objectives of the st rategy were: (1) effective implementation of IP laws in 
Tonga for enhanced protection of domestic and foreign creations and innovations, (2) creation of a 
comprehensive IP legal framework for the protection of Tongan creations and innovations in Tonga 
and globally, and (3) increased use of the IP system, with tangible benefits from the exploitation of 
IP assets in Tonga.  
4.27.   In 2018, the IP Unit updated the version of WIPO 's Industrial Property Automation System 
(IPAS) it uses, which has enabled it to process a pplications electronically. The unit is now working 
towards another upgrade of IPAS, to include industrial design, patents and Madrid applications. 
Tonga has also joined WIPO Brand, making all applications for trademarks publicly available online 
through t he WIPO Brand database. A dedicated website for IP is also available for public search.  
4.28.   The IP Unit is currently considering the ratification of the 2005 amendment of the TRIPS 
Agreement. The unit will assess the implications of accepting the amendments be fore the ratification 
process can be completed.  
5  SECTORAL TRADE POLICIES  
5.1  Agriculture and forestry  
5.1.  Agriculture and forestry contributed 17.7% to GDP in 2018/19. Agricultural production has 
declined marginally over the review period. Tonga retains a strong tr adition of subsistence farming 
on small land holdings, using multi -crop systems based on root crops. Most households keep WT/TPR/G/409 • Tonga  
 
- 9 - 
 
  livestock, particularly pigs, chickens and, more recently, sheep. Agriculture is the dominant export 
sector, involving a large proport ion of the population, directly accounting for almost a third of 
merchandise exports in 2018, and contributing significantly more through processed foodstuffs. A 
significant share of export shipments are agglomerated from the production of a large number o f 
smallholders, often with Government coordination.  
5.2.  Informal exports carried by air passengers are also commercially significant, since traditional 
vegetables are prized by Tonga 's large diaspora communities, but there is insufficient data to analyse 
their extent or trend. Kava is a particularly important export crop due to its high value, low weight 
and stability in storage, which makes it commercially viable even for remote communities that face 
high internal shipping costs, but it can only legally be imp orted into Australia on an informal basis. 
The Government is delighted that, after 16 years of work by a number of Pacific Governments, in 
2020 the Codex Alimentarius Commission approved a regional standard for kava (for use as a 
beverage), and is grateful  for the efforts of all involved. In addition, a kava quality standard for 
Tonga was launched in June 2020, to gain new and maintain existing market access. This was made 
possible with the support of the Pacific Horticultural and Agricultural Market Access  (Pharma Plus) 
Program. It is hoped that this will pave the way for regulated formal exports to a wider range of 
markets in the near future.  
5.3.  The Government 's strategy for the agricultural sector is outlined in the Tonga Agriculture Sector 
Plan (TASP) 2016 –20, which was developed with the support of the International Fund for Agriculture 
Development (IFAD), the World Bank and United Nations Development Program (UNDP). The TASP, 
coming to the end of its life, is in need of review, as are a number of pieces of  outdated 
agriculture -related legislation, for which donor assistance would be required.  
5.4.  Tonga is also looking at opportunities for import substitution, by introducing new commercial 
crops and varieties, and promoting crop diversification. Vegetables, exot ic fruit trees and root crops 
are among those currently being introduced to displace imports. Recent diversification in livestock 
production serves the same purpose.  
5.5.  Agriculture in Tonga faces a number of long -term challenges. Climate change has already 
resulted in increased variability in precipitation, and higher temperatures. Consequently, the country 
experiences more frequent periods of drought and flooding, which in turn have led to reduced 
productivity in a wide range of crops. The sector will need to  increase its research activity in order 
to breed and introduce new varieties that are more resilient to the emerging climate if current levels 
of productivity are to be maintained. Unfortunately, research operations have been heavily damaged 
by recent cyc lones and the Government has not had sufficient resources to restore capacity to its 
former level.  
5.6.  Tonga also faces interlinked structural challenges due to the shortage of available land (for 
agriculture and other uses) and the highly distributed nature of land ownership. This issue is a high 
priority for the Ministry of Lands and Natural Resources, which placed a moratorium on the further 
subdivision of agricultural land in 2020. The ministry has also been conducting incremental 
digitization of land administration, which is expected to expedite transactions. The agricultural sector 
is also hampered by the large amount of unused land owned by the diaspora.  
5.7.  Among the more immediate challenges facing the Government is the implementation of  PACER 
Plus, and improvements in SPS and quarantine services that will help to facilitate exports to 
Australia, New Zealand, and other island parties.  
5.8.  The Government 's strategy for forestry is outlined in the Tonga National Forest Policy (TNFP) 
2009, and t he Management Plan for the Forests and Tree Resources of Tonga 2017. The latter 
highlights the urgency of establishing a national inventory of forestry resources to improve analysis 
of the sustainability of current management arrangements, and to inform fu ture policy priorities. 
This would require donor support to set up, but would then be maintained and updated through the 
Government 's budget. The Government gazetted new Sandalwood Regulations in 2016, to improve 
sustainable management of the resource and promote new planting of sandalwood for commercial 
purposes. The rehabilitation of degraded foreshores in areas vulnerable to rising sea levels, storm 
surges, coastal erosion and salt spray will also play an important role in the country 's adaptation to 
climate change.  WT/TPR/G/409 • Tonga  
 
- 10 - 
 
  5.2  Fisheries  
5.9.  Fishing contributed 1.9% to GDP in 2018/19, but fresh fish represented more than 20% of all 
merchandise exports in 2018. The most important commercial species are tuna, deepwater snapper, 
and bêche de mer. Ornamental, shell and live fish also make a significant contribution to export 
earnings. Strategic planning is guided by the Tonga Fisheries Sector Plan 2016 –24, with 
implementation further governed by the Tonga National Fisheries Policy 2018. Tonga is a member 
of the Western Centra l Pacific Fisheries Commission (WCPFC), and ratified the Port State Measures 
Agreement (PSMA) in late 2019, which is now being implemented. The Ministry of Fisheries 
collaborates closely with the Pacific Community (SPC) and the Forum Fisheries Agency (FFA) . 
5.10.   The Government 's aim in its critical tuna fishery is to achieve a balance between revenue 
generated from licences sold to vessels based in Fiji and American Samoa (targeting albacore), and 
sustainably building local harvesting and value addition, for bot h domestic consumption and export, 
which focuses on yellowfin. The existing domestic longline fleet exports fresh tuna to the 
United  States, Japan, Australia and New Zealand. The fishery is governed in accordance with the 
Tuna Management and Development Pl an 2018 –22, which establishes catch targets and effort 
controls (by limiting longline licences and purse seine fishing days). The Plan prioriti zes three key 
infrastructure improvements: a small -scale loin processing facility for albacore, an airport cold 
storage facility, and wharf development to meet international standards and improve access to fuel, 
fresh water, ice, slipway facilities and berthing. However, donor support is likely to be needed to 
implement these improvements.  
5.11.   The snapper fishery is more  locally based, employs around 200 people, and supplies both 
domestic and export markets (earning roughly USD  1 million annually, primarily from the 
United States ). It has seen a recent increase in smaller vessels supplying the local market. The 
Ministry o f Fisheries published a Snapper and Grouper Management Plan in 2019, to strengthen 
cooperation between Government and industry, improve fishing control measures, and maximi ze 
economic returns.  
5.12.   There is scope for expansion of harvesting certain species, whi le increasing economic returns 
from processing and support services (such as vessel repair and maintenance, and retail of bait and 
spare parts), and increasing and diversifying exports, including the possibility of exporting frozen 
products. However, chall enges such as air freight capacity and frequency, the export cold chain 
(including blast freezing capability and cold storage facilities), packaging and processing facilities 
(such as for loining), supply of appropriately skilled labour, and ensuring timel y clearance of fresh 
fish in export markets remain significant challenges.  
5.13.   In order to improve the management of smaller scale coastal fisheries, the Ministry of 
Fisheries is supporting the creation of special management areas (SMAs), which give the coasta l 
community the authority to lead in the protection of the area, prevent illegal fishing and improve 
sustainability. This programme has grown rapidly since 2014, and SMAs now cover around half of 
Tonga 's coastal communities.  
5.14.   The Government closely follows the negotiation of a fisheries subsidies agreement at the WTO, 
and participates actively through the Pacific Group. Not only will the conclusion of a meaningful 
agreement be critical for the sustainability of the world 's fisheries, but an agreement that is  effective 
in reducing the total quantity of subsidies provided to the global fishing industry would level the 
playing field for small island states with substantial fisheries, improving the prospects for a 
sustainable fishing industry to be a driver for e conomic development.  
5.3  Seasonal offshore work  
5.15.   Since the launch of the Recognised Seasonal Employer (RSE) scheme, under which Tongans 
are able to work in the agricultural sector in New Zealand for up to seven months each year, seasonal 
overseas work has progr essively become an important component of the Tongan economy, broadly 
defined. Australia complemented the RSE scheme with its own Seasonal Worker Programme (SWP), 
which also includes the hospitality sector, and the combined effects have been substantial: i n 
2018/19, 2,037 workers travelled to N ew Zealand  and 3,737 to Australia. This is equivalent to 20% 
of the employed population of Tonga.   WT/TPR/G/409 • Tonga  
 
- 11 - 
 
  5.16.   More recently, both Australia and New Zealand have introduced new programmes that provide 
additional benefits in terms of duration or skill level. Where Australia 's SWP allows workers to travel 
for up to 9 months per year, the Pacific Labour Scheme (PLS), launched in 2018, offers the chance 
to work for between 12 and 36 months in a sector with identified labour short ages in Australia, 
offering greater opportunities to improve skills. So far, the meat industry has dominated, accounting 
for about two thirds of jobs. New Zealand is currently piloting the Pacific Trades Partnership (PTP), 
which offers work to skilled trad espeople in the construction industry.  
5.17.   The Tonga Labour Mobility Policy Framework, currently being finali zed, governs public support 
for these schemes. Its purpose is to enhance the development impact not only to the worker, but to 
their family, community and Tonga as a whole. It also identifies strategies to mitigate negative social 
impacts and reduce unnecessary costs and business environment constraints for outgoing workers. 
For instance, the Government is focusing on reducing pre -departure costs by elim inating the need 
for workers from outer islands to travel to Tongatapu for regulatory reasons before leaving the 
country. This has involved legislative change in 2020 to enable police reports to be obtained locally, 
and the Government has worked with the W orld Bank to install x -ray machines in Princess Fusipala 
Hospital at Haápai, and Ngu Hospital at Vavaú, so that full medical checks can be completed on the 
outer islands.  
5.18.   It is estimated that remittances and savings by workers on temporary schemes are equi valent 
to around 8% of GDP. Tongan participation in both the RSE and SWP has grown by an average of 
14% per year since 2013/14 (6% RSE, 20% SWP).  
5.19.   Women 's participation has remained low, although it increased slightly in 2018/19 to 29%. 
Since recruitment re sumed in October 2020, there has been a marked increase in the demand for 
female workers. Many of the sectors covered by these schemes tend to be dominated by one gender 
or the other, so the balance of industries included and number of jobs within each has  a strong effect 
on the overall gender balance of workers. Sectors such as caregiving and hospitality tend to attract 
a high proportion of women. World Bank analysis suggests that, although on average female workers 
earn less than men, they remit more than  their male counterparts.  
5.20.   The scale of this activity means that even moderate disruption in the sector can have 
macroeconomic effects on aggregate demand and the foreign exchange market. This risk could be 
mitigated by further broadening the number of mark ets and sectors available to Tongan workers.  
5.4  Manufacturing  
5.21.   Manufacturing contributed 5.2% to the economy in 2018/19, within a broader industrial sector 
that accounted for 15.1%. The most recent survey data available (2016/17) indicates that around 
650 people are employed in 83 manufacturing firms. Food and beverages account for more than a 
third of production (37%), with non -metallic mineral products, including concrete blocks and water 
tanks, the other significant subsector (24%). Tonga 's leading manufactu red exports are processed 
foodstuffs, accounting for 13% of merchandise exports, which are dominated by processed fruits 
and nuts.  
5.22.   The Ministry of Trade and Economic Development collaborates with the private sector in a 
"Buy Tonga Made " initiative, to pro mote domestic consumption of locally made goods, including by 
tourists.  
5.23.   Given the extensive linkages between the majority of manufacturing activity and either the 
agricultural or fisheries sector, much of the Government 's strategic planning for manufacturi ng is 
accommodated in these sectors ' plans (the TASP and TFSP). Complementary actions are included in 
the PSDSAP and TTPF.  
5.5  Services  
5.24.   The services sector represented 49.2% of the economy in 2018/19.  
5.25.   Due to the country 's geography, transport costs are a major  investment climate impediment, 
both domestically and internationally. Transport and storage contributed 3.4% to GDP in 2018/19. 
Maritime transport is the most important mode for merchandise trade. The main port in Nuku 'alofa WT/TPR/G/409 • Tonga  
 
- 12 - 
 
  has an annual throughput of ap proximately 25,000 TEUs, with storage capacity for around 600. The 
Government 's current priority is to extend the larger of its international berths from 180 to 
200 metres by 2023, with the assistance of a USD  55 million grant agreement now signed with the  
ADB. 
5.26.   Air transport services are also very important in both the tourism and fish export sectors 
(since Tonga currently does not have the facilities to export frozen fish). Given the importance of 
the cold chain for high -value fresh fish exports, the addit ion of cold storage facilities to the airport 
at Nuku 'alofa is an important trade -related infrastructure priority.  
5.27.   Information and communications technology and e -commerce are particularly important for 
small island developing states, due to their ability to reduce high trade costs associated with 
remoteness. The Government 's support for accelerated e -commerce development is outlined in the 
Tonga National E -commerce Readiness Assessment (TNERA) and the Digital Government Strategic 
Framework (DGSF, 2019 –24). The DGSF sets the target of universal mobile or wireless access by 
2024, and includes a range of activities to foster e -commerce growth, including the development of 
systems for e -signatures, e -payments to Government, e -procurement, and an electronic land  
registry. The TNERA includes actions relating to e -commerce, ICT infrastructure, trade logistics, 
digital finance and payments, the regulatory framework, and skills development.  
5.5.1   Tourism  
5.28.   Tourism is a critical sector, including catering to diaspora communities. Tourism contributes 
approximately 20% to GDP, is the second largest source of foreign exchange earnings, and employs 
more than 2,500 people directly and indirectly. Growth in the sector has been very strong over the 
review period: visitor arri vals have risen by 12.5% per year since 2014, travel receipts have grown 
14.2% per year from 2014 to 2019, and cruise ship arrivals have seen annual growth of 11.6% since 
2016. The ongoing development of the sector is governed by the Tourism Sector Roadmap  2018-22, 
which ultimately aims to expand the sector to 30% of GDP.  
5.29.   Tonga is able to offer a number of specialist tourism attractions, including marine wildlife such 
as the humpback whale and manta ray, and a variety of cultural experiences. The country ha s a 
number of marine parks and reserves, which are an important means to protect the value of tourism 
revenues. In October 2020, the Tonga National Museum was reopened, with support from the 
Government of Japan and Auckland Museum. The Museum has a range o f Tongan artefacts, in 
addition to contemporary and historical works of Tongan art.  
5.30.   In April 2020, visitor arrivals were reduced to zero due to border closures in response to the 
coronavirus pandemic. The Government is providing targeted support to the sec tor during this 
period, but is encouraging tourism service providers to use this time to focus on skill and service 
improvements, through training and other measures. The Government has extended a programme 
to improve the cleanliness and attractiveness of villages from Tongatapu to the outer islands. The 
Government is also working with service providers to develop more products aimed at domestic 
consumers, including for activities such as whale -watching and package holidays in the outer islands. 
These measu res are part of the Government 's Tourism Crisis Response and Recovery Plan, which 
aims to ensure that the sector is ready to provide safe and high quality experiences as soon as 
national borders reopen.  
5.31.   The Ministry of Tourism has recently established the internal capability to collect and analyse 
tourism statistics. The ministry 's priorities will be to learn more about how much the country earns 
from different types of tourism, and develop an up -to-date view of firms in the tourism sector, 
particularly on the outer islands, to better inform future policy development.  
5.6  Offshore mining  
5.32.   Tonga has the potential for seafloor mining of various metals, and has provided exploration 
licences to commercial partners for over ten years. The Government remains committed to this 
sector through the establishment of an enabling regulatory framework. The Seabed Minerals Act 
2014, which was developed in collaboration with the EU and SPC, has set a global precedent for the 
legal architecture of socially, economically and enviro nmentally sustainable development of this 
sector. Key provisions include the establishment of a sovereign wealth fund to ensure that the return WT/TPR/G/409 • Tonga  
 
- 13 - 
 
  to Government provides long -term benefits and minimi zes undesirable foreign exchange effects. 
Global economic co nditions are not currently favourable to the seabed mining sector and its relatively 
untested technology, and the timeframe for the continuation of exploration, and eventually mining 
operations, is uncertain. There has been a lively debate at both the nati onal and regional levels 
regarding the social and environmental consequences of seabed mining, and possible mitigating 
actions that could be taken to reduce any negative effects. The Government is using the current 
hiatus to engage with civil society on th ese issues and to monitor and review developments in this 
sector.  
6  TRADE NEGOTIATIONS AND RELATIONSHIPS  
6.1  Multilateral  
6.1.  Tonga is one of four Pacific WTO Members that has no permanent representation in Geneva, 
and is currently represented in the WTO by the Perm anent Delegation of the Pacific Islands Forum 
in Geneva, and by the Government 's High Commission in London. The Government understands the 
benefits of a permanent office to enable more active participation in the multilateral trading system, 
but at present  sufficient funding is not available.  
6.2.  The Government 's current negotiating priority is on fisheries subsidies. Tonga has extensive 
artisanal and small -scale fisheries, whose management and stock assessment is led by communities 
through SMAs. A key interest  in the negotiations is to ensure that basic forms of support to these 
fishers, such as provision of ice, are not undermined by burdensome notification or scientific stock 
assessment requirements. The Government is also keen to ensure that any limitations on the 
definition of artisanal fishing do not impede development by threatening the withdrawal of subsidies 
at the first sign of formali zation or commerciali zation.  
6.3.  Tonga 's second core interest in the fisheries subsidies negotiation is to protect the 
Gover nment 's ability to provide subsidies that would enable the Tongan fleet to capture a greater 
share of the commercial fish available within the country 's EEZ in a sustainable way. A critical right 
that Tonga wishes to preserve is the ability to provide diff erent licensing conditions to vessels, 
depending on the contribution they make to the domestic economy, so it is vital that fishing quotas 
or licences must not be interpreted as subsidies for the purposes of the agreement. Again, for a 
small administration  like Tonga, burdensome requirements that oblige the authorities to submit 
notifications of fisheries management measures, or to conduct inappropriately complex stock 
assessments in order to subsidi ze, could potentially have much the same effect as an outr ight 
prohibition on all subsidies.  
6.4.  Aside from fisheries subsidies, the Government has also been following with interest the Joint 
Statement Initiatives (JSIs) on e -commerce and micro, small and medium enterprises (MSMEs), 
amongst others. The Government ful ly supports the objectives of the joint statement on agriculture 
export prohibitions or restrictions relating to the World Food Programme. The Government is ready 
to work constructively with other members to explore all current concerns and possible soluti ons 
relating to reform of the WTO.  
6.5.  In capital, the Government 's priorities are implementation and ratification of the TFA, 
ratification of the 2005 TRIPS amendment, and ensuring that all of its notifications obligations are 
up to date.  
6.2  Regional  
6.6.  In December  2020, The Pacific Agreement on Closer Economic Relations Plus (PACER  Plus) 
came into force between New Zealand, Australia, Samoa, Kiribati, Tonga, Solomon Islands, Niue and 
the Cook Islands. Negotiated between 2009 and 2017, it is the most economically si gnificant 
free-trade agreement that Tonga has joined. As noted previously, the Government is making a 
number of trade facilitation improvements under initiatives established through the PACER Plus 
Readiness Package, including adoption of ASYCUDA World and the creation of the Tonga Trade 
Portal. In addition to the Readiness Package, Australia and New Zealand have committed 
AUD 25.5 million in aid for trade through a jointly managed Development and Economic Cooperation 
Work Programme, which will cover the fir st five years of operation of the agreement.  WT/TPR/G/409 • Tonga  
 
- 14 - 
 
  6.7.  The Pacific Island Countries Trade Agreement (PICTA), between the Cook Islands, Fiji, Kiribati, 
Nauru, Niue, Papua New Guinea, Samoa, Solomon Islands, Tonga and Vanuatu, was ratified by 
Tonga in 2003. PICTA requ ires gradual reduction of tariffs to zero by 2021. The Government intends 
to complete the necessary domestic requirements to declare Tonga 's readiness to trade under PICTA.  
6.8.  Tonga intends to accede to the IEPA with the EU once work to complete domestic requ irements 
is complete. The Government intends to assess the implications of joining the UK –Pacific EPA 
between the UK, Papua New Guinea and Fiji.  
7  CONCLUSION  
7.1.  Tonga remains firmly committed to the multilateral trading system. Small, open economies 
such as Tonga are particularly reliant on a system of binding international rules that provide a solid 
framework for economic development based on the free movement of  goods, services, investment 
and labour. The Government is hopeful that the concerns that various members have about the 
future of the WTO can be resolved through consensus -based negotiation that avoids weakening a 
system that is of such value to all of it s members, not least SIDS and small vulnerable economies 
(SVEs).  
7.2.  As the smallest Pacific WTO Member, the Government faces capacity constraints that often 
require a different pace of reform or approach to regulation than would be adopted by larger 
members. Considering these constraints, the review period has been an exceptionally productive 
time for trade policy planning in Tonga, and several further trade facilitation milestones are expected 
to be achieved in the near future. Nevertheless, the Government ha s limited resources with which 
to follow multilateral negotiations and comply with its transparency obligations, and the Government 
urges members to keep in mind the smallest WTO Members when designing the transparency 
requirements of new disciplines.  
7.3.  Few countries are more seriously affected by natural disasters than Tonga, and so recogni zing 
the connection between natural disasters and trade is vital. The onset of climate change, bringing 
greater unpredictability and frequency of natural disasters, will n ot only continue to damage the 
natural environment, but will often set back long -term development efforts in a single day. For a 
country like Tonga, it is not possible to design trade policy without an integrated appreciation of how 
economic development wi ll continue to be complicated by natural disasters.  
7.4.  A further challenge is to identify how the multilateral trading system can do more to build the 
resilience of international trade to natural disasters, especially for small countries. Whilst many 
discussi ons are taking place in international fora on developing resilience to climate change, the 
WTO also has a vital role to play to ensure that the trade dimension of resilience is not 
overshadowed.  
 
__________