WT/TPR/S/239 Trade Policy Review 
Page 36 
 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) INTRODUCTION  
1. PNG has continued to pursue an open trade policy since 2000.  While the economy is more 
outward looking, with import restrictions, especi ally tariffs, reduced and relatively few formal 
non-tariff barriers overall, PNG's trade policy has aime d in principle at the "domestication" of value 
added in agriculture, minerals, and manufactur ing (including foodstuffs ) to promote import 
substitution and diversify the economy away from mi neral and petroleum extraction. Complementary 
tax and tariff reforms started in 1999 were impl emented successfully during the review period to 
reduce reliance on tariffs for tax revenues and thus  to improve economic efficiency.  The tariff 
remains PNG's main trade policy instrument of pr otection, even though it now accounts for less than 
3% of tax revenue compared with roughly 30% in th e 1990s.  Tariff revenue losses were largely offset 
by other taxes, including the introduction of a va lue added tax on goods and services (renamed the 
Goods and Services tax (GST) from 2004), extended c overage of excise taxes to replace tariffs on 
certain goods, and until recently buoyant mineral tax revenues.    
2. As a result of tariff reform during the review  period, the average (unweighted) applied MFN 
tariff fell from 20.5% in the first half of 1999 to 5.1% in 2006, where it has remained.  Applied MFN 
tariffs are generally much higher for agricultural ite ms;  their simple average (WTO definition) is 
12.5% since 2008, while the simple average for non-agricultural goods is 3.9% (33.2% and 18.5% respectively before mid-1999).  Some 77% of tari ff lines are duty-free.  There are essentially three 
non-zero band rates:  15%, 25%  and 40%, phased down mainly  from 25%, 35% and 50%, 
respectively, by the Tariff Reduction Program (TRP ) implemented from mid-1999 to 2006.  The rate 
of 70% on sugar was not lowered as intended to 40%, and will continue un til 2011.  The latest 
changes were mainly a few tariff in creases in the 2007 Budget.  Tari ffs are transparent;  specific (non-
ad valorem ) duties, which tend to conceal relatively high rates, account for only 1% of tariff lines. 
3. Further reductions to lower and more unifo rm tariff rates would enhance resource-use 
efficiency, and lower the anti-export bias still created by tariffs, which directly when levied on inputs 
(irrespective of whether they are imported or so urced domestically) and indirectly tax exports.  
Additional tariff reductions were deferred in the 2010 Budget until 2011 as the economy slowed down 
owing to the GFC and falling commodity prices, and the consequent fall in mineral tax revenues.  
While the Government apparently remains committed to these tariff reductions, domestic pressure exists for protection through higher tariffs, and an undesirable vacuum seems to exist in tariff policy, 
to the detriment of tariff predictability.  This pr essure, also reflected in opposition to further tariff 
reforms, is being fuelled by the wide spread di ssatisfaction of manufacturers with the Government's 
failure to reduce binding constraints to PNG's ec onomic and private-sector development (e.g. meeting 
infrastructure needs, improving law and order, a nd reducing the high costs of doing business), which 
they saw as an essential part of the cons ensus for supporting the TRP.     
4. PNG bound all tariff items at an (unweight ed) average rate of 32.8%.  The large 
27.7 percentage point gap between this and averag e applied MFN rates, widened by unilateral tariff 
reductions, leaves PNG much scope to raise tariffs within its commitments, also contributing to the 
unpredictability of the tariff.  However, applied tariffs have been raised only occasionally.  Applied 
tariffs on a handful of items seemingly exceed bound rates.  
5. PNG Customs has facilitated trade by modernizing processes and procedures.  ASYCUDA 
has been upgraded to ++.  Brokers can submit declar ations electronically, but roll-out has been slow 
and is incomplete.  Some 10% of goods are inspected .  Risk management is being developed slowly.  
Slow clearance seems to reflect physical delays from inadequate quarantine and port services.  Papua New Guinea WT/TPR/S/239 
 Page 37 
 
 
Customs transparency has improved.  PNG joined the World Customs Organization in 2002.  It is 
acceding to the Revised Kyoto Convention and seems to meet all mandatory requirements. 
6. PNG implements WTO commitments on customs valuation and applies the transaction value.  
It has no anti-dumping, countervailing or safeguards legi slation.  An import levy of 2% introduced on 
all imports in December 2003 ceased from the end of 2004.  PNG currently levies no other 
discriminatory duties or charges on imports.  Refined petroleum imports, although duty free, are prohibited under the 30-year government agreement with  the operator of the oil refinery as part of its 
construction.  
7. PNG has no import quotas and minimal import licen sing arrangements.  It controls imports 
predominantly for national health, safety, security , and environmental reasons.  Exceptions are the 
prohibition on imports of uncooked poultry products and eggs, and li censing restrictions on cooked 
and processed poultry products.  Quarantine or SPS r estrictions on certain products, ostensibly on a 
risk assessment basis, appear to be most restri ctive to fish, but apply to other goods e.g. fruits, 
vegetables and meats.   
8. The export regime remains relatively open.  E xport taxes, which have narrowed in coverage, 
apply mainly to crocodile hides, and to round logs at 28.5% of the f.o.b. value;  this rate replaced the 
progressive tax in 2007 when an additional tax of K 8 per cubic metre was applied.  Exports of certain 
trees are prohibited for environmental reasons.  Many primary products require export licences, and 
several statutory marketing boards have exclusive export rights.  PNG also subsidizes manufactured 
exports through corporate income tax concessions (i ncluding those in export processing zones that are 
being set up) whose cost-effectiveness is questionable. 
9. Government procurement has been reformed, but is still used as an important instrument of 
industrial policy:  local suppliers receive a pr eferential margin of 7.5% on contracts worth 
K 1-10 million, and those under K 1 million are reserved for them.  PNG has improved its system of setting standards and conformity assessment, and main tains mainly international standards.  State-
owned enterprises dominate many key service infrastructure industries, such as electricity, 
telecommunications, aviation, water and sewerage,  postal services, and ports.  The Independent 
Consumer and Competition Commission, formed since the last review, is responsible for enforcing 
competition policy, including regulating major stat e-owned service suppliers, merger law, and for 
administering and monitoring price controls.  PNG has taken significant steps to improve its protection of intellectual property by amending key legislation;  however, implementation and 
enforcement continue to be major challenges, as the importation, reproduction,  and sale of counterfeit 
and pirated goods have increased.  Customs may in itiate action to suspend clearance of suspected 
illegal or pirated imports ex officio  for registered right owners (only three in 2008). Parallel imports 
are not banned.  
(2) M
EASURES DIRECTLY AFFECTING IMPORTS  
(i) Registration, documentation, and customs procedures 
10. The PNG Customs Service was separated from the Internal Revenue Commission (IRC) in 
January 2010.  The main customs legislation is  the Customs Act 1951 (as amended) and supporting 
regulations.  Significant amendments since 2007 include establishing an independent Customs 
Review Tribunal to review Customs decisions follo wing a first internal appeal to the Commissioner WT/TPR/S/239 Trade Policy Review 
Page 38 
 
 
General (Tribunal decisions are appealable to the courts)1;  clarifying Customs' responsibilities over 
licensing of brokers, especially the issue, suspensi on, and cancellation of licences or the imposition of 
restrictions, and making these decisions reviewable by the Tribunal;  and authorizing Customs to issue 
binding or advanced rulings within 15 days from a pplication.  However, im plementation of advanced 
rulings was slowed by delays in finalizing the ad ministrative guidelines, which were expected to be 
approved in August 2010 (delayed from end-2009).  A dvanced rulings are due to be introduced by 
2011. Customs auditing powers were al so strengthened;  in addition to targeted cargo inspections, it 
conducts post-clearance audits (PCA) at the importers ' premises within five years from importation.   
11. No registration requirements are in place for im porters.  Any person or entity, including 
foreigners, with a Tax File Number (TFN) may import by submitting an Import Declaration Form 
(Customs Form 15).  This must be prepared and lodged by a licensed Customs broker.2  C u s t o m s  
documentation requirements cover the invoice showing the correct value, quantity and description;  
bill of lading or air waybill;  packing list;  custom s valuation declaration;  certificate of origin and 
value (if applicable);  and import permits or  licences for prohibited or restricted imports. 
12. Since 2004, PNG Customs has facilitated trade by modernizing its processes and procedures 
assisted by a Customs Modernization Management Team.  UNCTAD's ASYCUDA, the automated 
customs system used in PNG for Electronic Da ta Interchange (EDI), has been upgraded to 
ASYCUDA++.  Brokers may submit declarations electronically via Direct Trade Input (DTI).  
However, initially due for completion by mid-2007, ro ll out has been slow, and now covers 13 of the 
21 entry ports (including Port Moresby in A ugust 2005 and Jackson International Airport in 
January 2006);  four more are to be covered. Some 50% of goods are cleared immediately using the 
green channel and 40% through the yellow lane if subject to permits.  The rest, passing through the 
red channel, are inspected.  When fully functiona l 80% of declarations will be cleared without 
Customs intervention, with the rest subject to either documentary or physical checks. 
13. The PNG Customs Modernization Strategic Action Plan for 2009-11 includes enhancing 
voluntary compliance in customs administration and pr omoting risk management, which is still in its 
infancy.  ASYCUDA's Risk Profiling function serves as the automated risk management system, with 
regional and national profiling committees inputting data .  While clearance still seems slow, physical 
delays now appear to be caused by inade quate quarantine and port services and not Customs.3  The 
authorities indicated that most goods are cleared within two days provided required documentation is submitted, and only in exceptional cases does it take  longer than one week.  According to the 
authorities, less face-to-face interaction between the customs officer and the importer, and improved 
management has enhanced effici ency and reduced informal payments.  Customs is introducing 
"gateway clearance" (gaining Customs clearance for cargo in PNG at the loading port rather than at 
the destination port), but resource constraints remain significant. 
14. Customs transparency has been improved.  Cu stoms started its website in 2005, and holds 
annual forums with stakeholders as well as monthl y meetings with business.  A PNG Customs Service 
Charter was implemented in January 2009.  In moving to paperless trading, Customs began 
implementing a single-window initiative in 2008, and electronic manifest transfers and payments are 
planned for 2010. 
                                                     
 
1 Appealable decisions cover tari ff classification, valuation, asse ssed duties, customs rulings, and 
imposition of administrative and interest penalties.  The Customs Review Tribunal has yet to become operative, awaiting appointment of members. 
2 Brokers must be licensed by Customs and be indigenous (labour laws prohibit non-nationals being 
employed as brokers). 
3 PNG Department of Treasury (2003) and Scollay (2007b). Papua New Guinea WT/TPR/S/239 
 Page 39 
 
 
15. PNG joined the World Customs Organization in  March 2002.  Customs is currently acceding 
to the Revised Kyoto Convention (initially planne d for June 2007), and seemingly introduced its 
mandatory requirements in 2007.  It is also consid ering the next steps to implement the Convention's 
specific annexes.  PNG is examining joining th e Istanbul Convention on Temporary Admission, and 
how to implement the WCO's SAFE Framework of Sta ndards to Secure and Facilitate Global Trade.  
It belongs to the Oceania Customs Organization (O CO) and participates actively in the APEC Sub 
Committee on Customs Procedures. 
16. PNG implements the WTO Customs Valuation Agreement, and uses the transaction value of 
goods as the primary method of levying tariffs (Customs Ad Valorem  Duties Regulations 1987 (as 
amended)).  However, the amende d 2006 Customs Act still provides that ad valorem  duties are to 
apply to the higher of the good's "actual money price paid by the importer plus any special deduction" 
and its "current domestic value" plus all f.o.b. char ges paid or ordinarily paid in the port of export 
(Section 96(2)).  Thus, it is unclear whether customs legislation fully complies with the WTO 
Agreement, which does not prescribe a "current dom estic value" or the possi bility of "choosing the 
higher value between two goods". 
17. PNG no longer requires preshipment inspection of imports. 
(ii) Tariffs  
18. The tariff is PNG's main trade policy inst rument, but due to rate reductions and 
complementary tax reforms it now accounts for a minor share of government revenue (falling from 
3.8% in 2000 to 2.7% in 2008).  Tariff rates are in Schedule 1 of the Customs Tariff Act 1990 (as 
amended).  They are, in principle, set yearly by the Department of Treasury during budget 
deliberations at the end of each calendar year (also the financial year), when Parliament approves rate 
changes.  They are largely based on recommendati ons from task forces that review requests from 
stakeholders, including the respective sectoral depart ments, rather than any formal institutionalized 
process. However, phased tariff reductions unde r the Tariff Reduction Program (TRP) were 
legislatively agreed in advance in 1999 until 2006.  The latest tariff rate changes involved mainly a 
few increases made in the 2007 Budget.   
19. Despite the TRP, some rates remain relatively high and disparate, so that further reductions 
and more uniform levels could enhance resource-us e efficiency, including by lowering the anti-export 
bias tariffs create by directly when levied on in puts (irrespective of whether they are imported or 
sourced domestically) and indirectly tax exports.4  The tariff structure still affords "exceptionally 
high" and "highly variable" effective rates of pr otection across products relative to a more neutral 
tariff structure (Chapter IV(4)).5  While the Government announced it would consider further tariff 
reductions in 2009 (based on reports in 2003 and 2007 that recommended a new programme of cuts to 
improve economic efficiency, competitiveness, and private-sector growth), this was deferred in the 2010 Budget until 2011 due to the serious impact of the global financial crisis on the private sector.
6  
While the Government appears committed to these, th ere is strong domestic pressure for returning to 
higher tariffs, and an undesirable vacuum exis ts in tariff policy, which undermines tariff 
predictability.7  This pressure, including opposition to furthe r tariff reforms, is being fuelled by the 
wide spread dissatisfaction of manufacturers w ith the Government's failure to reduce binding 
constraints to PNG's economic and private-sector de velopment, such as meeti ng infrastructure needs, 
                                                      
4 Scollay (2007b). 
5 Scollay (2007b), p. 10. 
6 Scollay (2007b). 
7 PNG Department of Treasury (2003) and Scollay (2007b), p. 80. WT/TPR/S/239 Trade Policy Review 
Page 40 
 
 
improving law and order, and reducing the high costs of doing business, which they saw as an 
essential part of the consensus for supporting the TRP.    
20. New goods produced in PNG are subject to the in termediate or the protected tariff rate, as 
appropriate.8  Since 1999, the overwhelming policy rationale for tariffs has been protection, with rates 
set by assessing the balance of economic benefits to PNG of domestic production against the costs of 
tariffs to consumers and businesses. 
21. Tariffs are levied on a c.i.f. basis.  The introduction of HS07 from 2008 reduced the number 
of 8-digit tariff lines from 5,625 (HS02) to 5,447.   The tariff schedule has only MFN rates and is 
available in hard copy and electronically;  it is  not, however, available on the Customs website. 
22. PNG has no tariff quotas. 
(a) Structure 
23. The TRP simplified the tariff by reducing the number of MFN ad valorem  rate bands from 
13 to principally 3 (excluding zero, which applies to goods not produced or potentially produced domestically):  an intermediate rate  of 15% on inputs;  a protective rate  of 25%;  and a prohibitive rate 
of 40%.  The TRP reduced them significantly over six years from mainly 30%, 40%, and 55%, 
respectively.
9  Its introduction in 1999-2000 immediatel y increased substantially the number of duty-
free items and reduced some very high rates (e.g . on plywood, veneer pane ls, and laminated wood) 
from 100% to 40%.  The highest rate of 70%, on suga r (covering six tariff lines), was not lowered as 
intended to 40% by 2006, and will continue, along  with the 20% tariff on canned mackerel, until 
2011.  The tariff on salt was raised from zero to 40% in 2003 (phased down to its current rate of 15% 
in 2006).  The 2007 Budget increased the tariff on canned dark meat tuna from 15% to 20% (on a 
tariff line comprising other tuna, thus making collection difficult), on carbonated soft drinks from 15% to 25%, and on canned baked beans from zero to 25%.
10   
24. The tariff regime is relatively transparent because only 1% of tariff lines are subject to 
specific (non- ad valorem ) duties (Table III.1).  These apply mainly to the excisable "sin" goods 
(involving alcoholic beverages a nd tobacco products), and poultry meat (fresh, chilled or frozen), 
eggs, animal feed preparations, and match es.  Some of these duties conceal very high ad valorem  
equivalent rates, for example on beer and ciga rettes to protect domestic monopolies (Chapter IV).11 
(b) Tariff bindings 
25. PNG has bound all tariff items, mainly at ra tes of 30% and 11% on non-agricultural goods, 
and 45% on agricultural products, except for higher  rates (55%, 75%, and 100%) on certain farm 
products e.g. nuts, certain vegetabl e oils and sugar, and lower rat es of mainly 11% and 20%.  Non-
agricultural products bound at above 30%, include  rates of up to, for example, 75% for "passenger 
motor vehicles" and 100% for "wood and its manufac ture".  The simple (unweighted) average bound 
                                                      
8 PNG Department of Trade and Industry (undated). 
9 Rates were phased to 25%, 35% and 50% in 2001-02 respectively and to 20%, 30% and 45% in 
2003-05. 
10 The 25% tariff was removed on beans for making canned baked beans. 
11 Scollay (2007b). Excise taxes are specifically levied  on imports in addition and separate to the tariff. Papua New Guinea WT/TPR/S/239 
 Page 41 
 
 
rate is 32.8%:  it is higher for agricultural prod ucts (WTO definition) at 43.7%, than for non-
agricultural goods, at 31.1% (Table III.1).12 
26. Applied tariff rates for a number of products a ppeared to exceed bound levels (Table III.2).  
Table III.1 
Tariff structure, selected years 
(Per cent) 
    MFN 
applied 
pre- 
1.07.99 MFN 
applied 
1.07.99
-end 99 MFN 
applied 
2000 MFN 
applied 
2003 MFN 
applied 
2006 MFN 
applied 
2008 -
10 Final 
bounda 
1. Bound tariff lines (% of all tariff lines) .. 100.0 100.0 100.0 100.0 100.0 100.0 
2. Simple average tariff rate 20.5 8.8 7.5 6.3 5.1 5.1 32.8 
   Agricultural products (HS01-24) 38.4 25.4 21.4 18.2 15.1 15.3 47.6 
   Industrial products (HS25-97) 17.4 5.9 5.3 4.3 3.4 3.2 30.1 
   WTO agricultural products 33.2 20.6 17.2 14.7 12.3 12.5 43.7 
   WTO non-agricultural products 18.5 6.9 6.1 5.0 4.0 3.9 31.1 
      Textiles and clothi ng 23.6 15.3 13.5 11. 0 9.0 8.3 29.9 
   ISIC 1 - Agriculture, hunting, fishing 37.2 23.9 20.8 18.0 15.1 15.8 48.9 
   ISIC 2 - Mining 12.2 0.0 0.8 0.4 0.3 0.2 20.2 
   ISIC 3 - Manufacturing 19.6 8.0 6.8 5.8 4.6 4.5 32.1 
      Manufacturing excluding food processing 17.5 6.1 5.4 4.4 3.5 3.3 30.2 
   First stage of processing 30.2 16.4 14.5 12.5 10.4 10.6 40.6 
   Semi-processed products 13.4 2.9 2.6 2.2 1.7 1.7 24.1 
   Fully processed products 22.3 10.4 8.8 7.4 6.0 5.9 36.2 
3. Duty-free tariff lines (% of all tariff lines) 2.5 76.6 76.1 76.1 76.2 76.7 n.a. 
4. Non- ad valorem  tariffs (% of all tariff lines) 1.1 0.9 1.0 1.0 1.0 1.0 1.3 
5. Tariff quotas (% of all tariff lines) n.a. n.a. n.a. n.a. n.a. n.a. n.a. 
6. Domestic tariff "peaks" (% of all tariff lines)b 1.4 23.0 22.8 22.8 14.1 14.4 0.6 
7. International tariff "peaks" (% of all tariff lines)c 30.4 23.0 22.8 22.8 14.1 14.4 72.1 
8. Overall standard deviation of ta riff rates 19.1 16.6 14.3 12.2 10.0 10.1 18.1 
9. Coefficient of variation of tari ff rates 0.9 1.9 1.9 1.9 2.0 2.0 0.6 
10. Nuisance applied rates (% of all tariff lines)d n.a. n.a. n.a. n.a. n.a. n.a. n.a. 
.. Not available. 
n.a. Not applicable. 
a Implementation of the U.R. was achieved in 2008.  Calcul ations for final bound rates are taken from the CTS database, 
 adjusted to the 2008 tariff schedule provided by the aut horities in HS07 nomenclature. 
b Domestic tariff peaks are defined as those exceeding three times the overall simple average applied rate. 
c International tariff peaks are defined as those exceeding 15%. 
d Nuisance rates are those greater than zero, but less than or equal to 2%. 
Note: Calculations exclude specific rates and include the ad valorem  part of alternate rates, where applicable.  The pre-July 1999 and 
1 July-end 1999 tariff schedules are based on HS96 nomenclature, consisting of 5,453 tariff lines;  the 2000, 2003 and 2006 tar iff 
schedules are based on HS02 nomenclature c onsisting of 5,625 tariff lines;  and th e 2008 tariff schedule is based on HS07 
nomenclature, consisting of 5,447 tariff lines. 
Source:  WTO calculations, based on data provided by  the authorities of Papua New Guinea. 
                                                      
12 Tariff averages exclude a few non- ad valorem  items that are bound by specific rates, some of which 
are estimated to have very high ad valorem equivalents e.g. up to 300% on cereals, beverages and tobacco.  WT/TPR/S/239 Trade Policy Review 
Page 42 
 
 
Table III.2 
Products on which MFN applied tari ffs exceed bound levels, July 2010 
(Per cent) 
HS code Description Applied 
MFN 
rate 
(%) Bound 
rate 
(%) 
02085010 Meat and edible meat offal, fr esh, chilled or frozen of crocodiles  25 11 
15071010 Soya-bean oil and its fractions, whether or  not refined, but not chemically modified 
- crude oil, whether or not degummed, packed in  containers of 150 kg or less or 166 litres or less 15 11 
15079010 Soya-bean oil and its fractions, whether or  not refined, but not chemically modified 
- other, packed in containers of  150 kg or less or 166 litres or less 15 11 
15091010 Olive oil and its fractions, whether or not refined, but not chemically modified 
- virgin oil, packed  in containers of 150 kg or  less or 166 litres or less 15 11 
15099010 Olive oil and its fractions, whether or not refined, but not chemically modified 
- other, packed in containers of  150 kg or less or 166 litres or less 15 11 
15121110 Sunflower-seed or safflower oil and fractions thereof: 
- crude oil packed in containers 150 kg or less or 166 litres or less 15 11 
15121910 Sunflower-seed or safflower oil and fractions thereof: 
- other, packed in containers 150 kg or less or 166 litres or less 15 11 
15122110 Cotton-seed oil and its fractions 
- crude oil, whether or not gossypol has been re moved, packed in containers 150 kg or less or 
 166 litres or less 15 11 
15122910 Cotton-seed oil and its fractions 
- other, packed in containers 150 kg or less or 166 litres or less 15 11 
15141110 Low erucic acid rape or colza oil and its fractions 
- crude oil, whether or not gossypol has been re moved, packed in containers 150 kg or less or 
 166 litres or less 15 11 
15141910 Low erucic acid rape or colza oil and its fraction 
- other, packed in containers 150 kg or less or 166 litres or less 15 11 
15149110 Other oil 
- crude oil, whether or not gossypol has been re moved, packed in containers 150 kg or less or 
 166 litres or less 15 11 
15149910 Other oil 
- other, packed in containers 150 kg or less or 166 litres or less 15 11 
28289010 Sodium hypochlorite 15 11 
Source:  PNG tariff schedule. 
(c) Applied tariffs 
27. The simple average applied tariff, uncha nged since 2007, is 5.1% (Table III.1 and 
Chart III.1).  This is well below the mid-1999 rate, of 20.5%, before the TRP.  Some 77% of tariff 
lines are duty free;  almost 13% have an MFN rate of 25% and about 8% are dutiable at 15% (Chart III.2).  The highest MFN rate of 40% (apart  from sugar) covers almost 2% of tariff lines 
(Table III.3).  MFN tariffs are generally much highe r for agricultural items.  The simple average tariff 
rate (WTO definition) in 2010 is 12.5% on agricu ltural products and 3.9% on non-agricultural (33.2% 
and 18.5% respectively before mid-1999). 
28. The large 27.7 percentage point gap betw een the average bound and applied MFN rates, 
owing to unilateral tariff cuts in the latter under th e TRP, means that PNG retains considerable scope 
to raise applied MFN tariffs within bound levels , which it has done occasionally, thereby making the 
tariff less predictable. 
 Papua New Guinea WT/TPR/S/239 
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0510152025303540
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21Per centChart III.1
Simple average applied MFN rates, by HS section, 1999 and 2008-10
Calculations exclude specific rates, and include the ad valorem  part of alternate rates.
WTO Secretariat calculations, based on data provided by the authorities of Papua New Guinea.Note:
Source :01   Live animals & products        
02   Vegetable products03   Fats & oils      04   Prepared food, etc.05   Mineral products
06   Chemicals & products07   Plastic & rubber
08   Hides & skins09   Wood & articles10   Pulp, paper, etc.11   Textiles & articles
12   Footwear, headgear13   Articles of stones
14   Precious stones, etc.15   Base metals and products16   Machinery17   Transport equipment
18   Precision instrument19   Arms & ammunition
20   Miscellaneous manufactures21   Works of art, etc.MFN July 1999-Dec. 1999
MFN 2008-10
Average applied rate
 July 1999-December 1999 
(8.8%)Average applied rate as 
of 2008-10 (5.1%)
 
 (0.1%) (1.4%) (12.8%) 
 (0.0%a)  (7.9%) 
 (0.0%a)  (76.7%) 
05001,0001,5002,0002,5003,0003,5004,0004,500
Duty free 5% 15% 20% 25% 40% 70%
a                  Includes only one tariff line.
Note:          Figures in parentheses indicate the share of total lines.   Totals do not add to 100% as no tariff rates are ava ilable
                    for 1.0% of the tariff lines (specific tariff rates). Source :     WTO Secretariat calculations, based on data provided by the authorities.Number of tariff linesChart III.2
Distribution of MFN tariff rates, 2008-10
 
 WT/TPR/S/239 Trade Policy Review 
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Table III.3 
Products with MFN tariff of 40% 
HS code Number of 
tariff lines Description 
Chapters 7 & 8 51 Edible vegetables, fruits and nuts 
130211 1 Opium (prohibited/restricted) 
4408 4 Sheets for veneering, for plywood or for other similar laminate d wood and other wood 
4412 10 Plywood, veneered panels  and similar laminated wood 
7113 3 Articles of jewellery and parts thereof, of pr ecious metal or of metal clad with precious metal 
7114 3 Articles of goldsmiths' or silversmiths' wares and parts thereof, of precious metal or of metal clad 
with precious metal 
7115 3 Other articles of precious metals or  of metal clad with precious metal 
7116 2 Articles of natural or cultured pearls, precious or semi-precious stones 
7117 3 Imitation jewellery 
82119310 1 Knives having other than fixed bl ades: of spring type opening (prohibited) 
9406 1 Prefabricated buildings 
Source: PNG tariff schedule.  
(d) Tariff dispersion 
29. Potential efficiency losses depend on the level of MFN tariff rates and their dispersion.  The 
more disparate the tariff rates, especially between highly substitutable goods, the greater the 
likelihood of  distorted consumer and producer choices.  Th e TRP had a mixed impact on dispersion.  
While the standard deviation fell sharply, from 19. 1 to 10.1 percentage points, the coefficient of 
variation rose from 0.9 to 2.0 (Table III.1).  Also, the share of tariff lines with domestic tariff peaks 
jumped from 1.4% to 14.4%, while the proportion subject to international peaks fell from 30.4% to 14.4%.  PNG's tariff rate dispersion is still relatively wide. 
(e) Tariff escalation 
30. PNG tariffs overall have on average a large degr ee of de-escalation (Chart III.3).  Average 
MFN tariffs are 10.6% on first stage of processing,  1.7% on semi-processed goods, and 5.9% on fully 
processed goods.  Nevertheless, escalation exists between semi-processed and fully processed goods, 
thereby implying considerably higher effective rate s of protection on the latter than nominal applied 
MFN rates. 
(f) Tariff exemptions and concessions  
31. The Minister of Finance and Treasury, with NEC approval, may authorize tariff exemptions 
or concessions on imports of specified goods to assist local industry.  Government policy has been to stop such arrangements, but the IRC still consider s requests on a case-by-case basis in consultation 
with other relevant departments.  The Chinese-funded Ramu Nickel project, for example, is the first to 
be granted tariff concessions on "consumables".
13  Once authorized by th e NEC, exemptions and 
concessions are published in the National Gazette .  Many blanket exemptions  may be redundant since 
they cover goods that are duty-free,  and hence could be eliminated. 
 
                                                      
13 Scollay (2007b), p. 59. Papua New Guinea WT/TPR/S/239 
 Page 45 
 
 
n.a.n.a.0.02.04.06.08.010.012.014.016.018.020.022.0
Food,
beverages and
tobaccoTextiles and
leather Wood and 
furniturePaper printing
and publishingChemicals Non-metallic
mineral
productsBasic metals Fabricated
metal products
and machineryOther
manufacturingPer centChart III.3
Tariff escalation by 2-digit ISIC industry, 2008-10
n.a.
Note:
Source :Not applicable.
Calculations exclude specific rates.WTO Secretariat calculations, based on data provided by the authorities.Average applied rate in manufacturing
(4.5%)First stage of processing
Semi-processed
Fully processed
 
32. Certain specialized capital equipment not read ily available in PNG may be imported duty-free 
temporarily for use in approved projects;  the im porter must lodge a security with the IRC and 
undertake to re-export the equipment on completion of the activity.  The Lihir, Ok Tedi, Misima, and 
Porgera gold mining projects and the Kutubu petroleum project benefited from the Average Import Duty Rate Scheme, which capped duty on imported i nputs at a lower average tariff rate.  However, 
these projects are now subject to a mining levy calculate d to be equivalent to the average rates of duty 
formerly paid. 
(g) Tariff preferences 
33. PNG grants long-standing preferential tariff ra tes on certain items to members of the MSG, 
and to the EU since 2008 under the interim EPA (Chapt er II).  PNG is in the process of implementing 
tariff preferences under PICTA, and is in the preliminary stages of preferences negotiations with Australia and New Zealand under PACER-Plus.     
(iii) Rules of origin 
34. PNG has no specific legislation on non-preferen tial rules of origin.  Preferential rules of 
origin are contained in specific bilateral and regi onal trade agreements (Box III.1).  A certificate of 
origin, issued by the designated authority in th e exporting country in accordance with specified 
certification procedures, is required to access the prefer ential rates.  Restrictive and variable rules of 
origin, including across goods within agreements and between agreements, undermine transparency 
and makes the trade regime more cumbersome, thereby adding to traders' costs.  They can greatly or 
fully offset any liberalization impact of trade agreements. WT/TPR/S/239 Trade Policy Review 
Page 46 
 
 
Box III.1:  Preferential rules of origin 
MSG 
The MSG has loose rules of origin requiring a change in 4-digit HS classification, with special processes 
defined as not constituting originating products;  these include packing, marking and labelling, mixing of products, simple assembly of parts of articles, and slau ghter of animals.  There ar e no special sectoral rules 
of origin.  The authorities indicate that the liberal rules of origin made the MSG the most effective 
agreement among its four parties. 
PICTA 
Rules of origin require either that the good is wholly produced or obtained in the exporting country, or that 
the final process of manufacture is performed in the exporting partner country with at least 40% of the good's factory cost being originating materials, labour, and overhead costs.  Under short-term difficulties 
or unforeseen circumstances, parties may agree to temporarily apply a tolerance margin of up to 2% on 
individual shipments.  Temporary derogations are also permitted where the operation of the rules would unduly restrict trade and, inter alia , the goods have been "substantially transformed" in the exporting state 
but cannot qualify as originating goods due to exceptio nal circumstances.  No sectoral rules of origin 
apply.   
EPA 
Rules of origin under the 2007 interim EPA are cont ained in Protocol II of the Agreement, entitled 
Concerning the Definition of the Concept of the "Originating Products and Methods of Administrative 
Cooperation", which the authorities indicated were still being finalized.  Originating goods eligible for 
tariff preferences are products "wholly obtained" (Article 5) in the EU or PNG or incorporating other materials that have undergone sufficient working or processing in the EU or PNG (Article 6).  "Wholly 
obtained" products are specified to in clude marine products caught in international waters by their vessels 
i.e. registered in the EU or PNG th at sail under an EU member or PNG fl ag and are either (a) at least 50% 
owned by EU or PNG natio nals or (b) owned by fi rms that have their head  office and main place of 
business in the EU or PNG and at least 50% owned by a member state of the EU or by PNG, public 
entities or nationals of that State.  Non-origin goods mu st be sufficiently worked or processed in the EU or 
PNG to meet widespread conditions specified in Annex II and II(a) by tariff item and product. These 
specify certain types of processing that  is needed to confer origin, and/or  for some items change in tariff 
heading or meeting various minimum value-added levels (expressed as a share of the ex-works price) e.g. 25%, 40%, 47.5%, or 50%.  
Other 
The rules of origin of the inactive Fiji-PNG Trad e Agreement were similar to those of the MSG. 
Source:   WTO Secretariat. 
 
(iv) Other taxes on imports 
35. An import levy of 2% introduced on all imports in December 2003 was removed at the end 
of 2004.  PNG currently levies no other discriminatory duties or charges on imports.  Internal 
commodity taxes, i.e. excise tax and VAT, are levied at equal rates on imports and domestically 
produced products (Chapter III(4)(i)). 
(v) Import prohibitions, restrictions, and licensing 
36. Authority to prohibit or regulate imports through licensing is provided in the Customs Act 
(Article 23) and the Customs (Prohibited Im ports) Regulation.  PNG has no import quotas and 
minimal import licensing arrangements. It controls imports predominantly for national health, safety, 
security, and environmental reasons.  Prohibited imports are pornographic material, recreational 
drugs, narcotics, certain wea pons, uncooked poultry products and eggs, and from December 2009 
non-biodegradable plastic shopping bags (Customs  (Prohibited Imports) (Plastic Shopping Bags) Papua New Guinea WT/TPR/S/239 
 Page 47 
 
 
Regulation).  Imports of cooked and processed poultr y products face licensing restrictions, and certain 
weapons and firearms must have a police permit.  PNG has not notified its licensing legislation to the 
WTO Committee on Import Licensing.  Imports of refi ned petroleum products are banned as part of 
the 30-year government agreement establishing the oil refinery. 
(vi) Anti-dumping, countervailing, and safeguard measures 
37. PNG's outdated anti-dumping a nd subsidy (countervailing) pr ovisions (Customs Tariff 
(Dumping and Subsidies) Act, 1976) were repeal ed in 1999, and have not been replaced.  
Manufacturers complain about their exposure to a llegedly "dumped" imports .  However, introducing 
such WTO-compliant arrangements is unlikely to be in PNG's economic interests given the 
substantial administrative costs involved.14  Moreover, such measures risk being "captured" by 
inefficient domestic industries as an anti-competitiv e means to protect against cheaper imports.  PNG 
has no safeguard legislation.   
(3) MEASURES DIRECTLY AFFECTING EXPORTS  
(i) Registration and documentation 
38. Exporters do not require registration but must have a Tax File Number (TFN).  An export 
declaration (Customs Form 15) must be submitted  by a customs broker to Customs describing the 
nature, quantity, value, and destination of the g oods.  Supporting documents to be presented are the 
export invoice, packing list, bill of lading or airway  bill, as well as a certificate of origin and export 
licence or permit if applicable.  Pre-export inspectio ns cover a wide range of agricultural and forest 
products, including coffee, vanilla, cocoa, and logs. Enhanced post-clearance audits (PCA) of 
exporters' premises , permitted for up to five years from export, are also being introduced. 
(ii) Export taxes, charges, and levies 
39. PNG has seemingly reduced the coverage of expor t taxes since its last Review (Schedule 2 of 
the Customs Tariff Act), although it is unclear on whic h products they were removed.  They are levied 
on the f.o.b. value of crocodile skins, va nilla (K 10 per kg), sa ndalwood (15%) and round 
(unprocessed) logs (excluding plantation logs).15  Exports of skins are taxed for conservation reasons.  
Log exports are taxed at a rate of 28.5% of the f.o. b. value, and a development levy of K 8 per cubic 
metre, intended to compensate for the suspected transfer pricing by exporters to reduce income tax, 
and to promote domestic log processi ng, although little of this occurs.16  Export taxes encourage 
downstream processing by reducing log prices, irresp ective of whether they are exported or sold 
domestically, thereby providing processors with an im plicit input subsidy, paid for by the loggers.  
Export taxes account for less than 3% of government ta x revenue, but their revenue is forecast to rise 
from an estimated K 107.3 million in 2009 to K 122. 3 million in 2010 due to greater log exports.17  
                                                      
14 PNG Department of Treasury (2003) and Scollay (2007b), p. 76. 
15 PricewaterhouseCoopers, Chapter 17. 
 16 Chenkang and Scollay (2009), p. 26.  The flat  rate of export tax replaced the progressive tax 
rates from 2007 when the log export development le vy was also introduced.  The single tax rate 
helped "insulate" exporters from wide fluctuations in kina exchange rates;  at the time of the change 
the average tax rate of the progressive system was 38%, but if still maintained would yield an average 
tax rate of some 15%. 
17 The specific rate replaced progressive ad valorem  taxes levied on the f.o.b. value of logs. WT/TPR/S/239 Trade Policy Review 
Page 48 
 
 
(iii) Export prohibitions, controls, and licensing 
40. Prohibited exports are narcotics and obscene mate rial (e.g. pictures, pornographic movies, or 
any other undesirable literature viol ating public decency).  Exports of  certain types of firearms or 
weapons (e.g. spring-bladed knives, daggers, swords ticks, knuckledusters, firearms including air, gas, 
flare, spear, and starting-signal pistols or guns) are restricted and require a police permit.  In addition, 
exports of cultural heritage items require a li cence from the National Museum;  exports of some 
cultural items are prohibited.  Exports of certain  trees (balsa, blackbean, cordial, ebony, rosewood, 
teak and all conifers) are prohi bited for environmental reasons. 
41. Permits and licences issued by the respective de partment responsible ar e required for exports 
of many primary products.  For example, the PNG Forest Authority issues export licences for round 
logs, the Department  of Fisheries for marine products (inc luding beche-de-mer, lobsters, prawns, 
oysters, and trochus shells), and the Department of Agriculture and Livestock or the relevant statutory 
marketing board for farm products, such as copra,  cocoa, and coffee. Exporters of unworked or 
alluvial gold must be licensed.  Log exports are monitored by SGS. 
(iv) Export assistance 
42. PNG subsidizes manufactured exports through two income tax concessions.  For firms 
producing new manufactured goods (as defined by the Industrial Development (Wage Subsidy) Act of 
1984) and other broadly defined produc ts authorized by the IRC, export income is exempt for the first 
three years, and then in each of the following four years, the portion that exceeds the average level for 
the first three years is exempt (Expor t Exemption Scheme) (Table AIII.1).18  A double deduction for 
income tax purposes applies to expenditure de veloping export markets for manufactured goods or 
where the PNG labour cost component exceeds 10% of the product's price.  The tax savings must not 
exceed 75% of incurred eligible expenditure, which includes that on overseas publicity and 
advertising, market research, tender preparation, samples, trade fairs and exhibitions, overseas sales 
offices, and certain travel.  Unprocessed primary products and marketing of services, e.g. tourism are excluded.  In 2006, the Export Exemption Scheme  cost K 18.9 million (K 14.9 million in 2005) in 
forgone tax revenue, and assisted five tax pa yers.  Revenue forgone from the double deduction 
measure was negligible in 2007 (K 0.1 million in 2006 and 2005). 
(v) Export processing zones  
43. Export processing zones (EPZs) may be either free commercial zones or free industrial zones.  
They are to be run by statutory authorities owned at least 50% by the relevant provincial government 
and 20% by a representative body of relevant landow ners (Free Trade Zones Act 2000).  The national 
government may hold up to 30% equity.  All goods ma y be traded internationally from EPZs without 
payment of tariffs.  Eligible goods or activities in EPZs must be approved, an d certain goods may be 
declared ineligible.  Goods from EPZs sold domestically  are to be subject to tariffs, including those on 
imported inputs.  Initially four zones were to be  created, but these are not yet operational.  Their 
economic rationale is unclear given that tari ffs have been substantially lowered.   
44. Priority was also to establish four industrial estates to:  provide the private sector with 
affordable and ready access to serviced land and f acilities;  better focus government support services 
and incentives;  promote investment opportunities;   and facilitate regional development.  The 
                                                     
 
18 WTO Members extended PNG's transition period to eliminate export subsidies under this Scheme 
until 31 December 2010 (WTO document G/SCM/86/Add.7, 27 November 2009).  PNG intends to dismantle 
the Scheme to meet its WTO commitments by the end of 2014 (WTO document G/SCM/N/192/PNG, 10 August 2009).   Papua New Guinea WT/TPR/S/239 
 Page 49 
 
 
Malahang Industrial Centre in Lae (Morobe Province) is the first to become operational.  Industrial 
estates are being developed in East New Britain  at Ulaveo, Port Moresby, and the Highlands 
provinces.  Priority activities are manufacturing and processing, repair and service workshops, building and construction, and transport.  Domes tic and foreign investors may locate in industrial 
estates.  They are administered by the statutory body, the Industrial Centres Development 
Corporation, which is seeking joint ventures with the private sector to develop the estates.  Plans exist 
to establish six regional Special Economic Zones, and to amend the FTZ Act to allow for them.  It was unclear whether tax incentives available in th ese estates extended beyond zero tariffs on imported 
inputs to other measures, such as income tax concessions.     
45. Rural industrial centres are also being considered , to cover, for exampl e, nurseries and factory 
units processing raw materials for export, production of import substitution goods, logistics facilities 
for food processing, kiln drying, timber grading, fo restry inspection facilities, refrigeration amenities, 
fish drying centres, and facilities for service industries.   
(vi) State trading 
46. PNG has made no notifications on state-trading en tities to the WTO.  However, it does have a 
number of statutory agricultural marketing boards that have exclusive rights to sell and export 
commodities e.g.  the PNG Spice Industry Board (section (4)(vii)). 
(vii) Duty drawback 
47. The importance to exporters of the duty drawb ack scheme has diminished as tariffs have been 
reduced but it still helps redress the anti-export bias of  tariffs.  It is administered by the Customs 
Service, with refunds approved by the Minister of  Finance.  Requests for duty drawback must include 
a detailed description of the manufacturing process in volved, including the nature and volume of 
inputs, accompanied by unit cost data based on import/export documents and commercial invoices.   
48. All goods on which drawback is claimed are to be examined by Customs (Section 110 
Customs Act).  Drawback is not allowed on goods whose domestic sales value is lower than the 
amount of the drawback (Section 109 Customs Act).  The scheme is of limited application, and is 
administered non-transparen tly on a case-by-case basis.   
(4) I
NTERNAL MEASURES  
(i) Internal taxes, exemptions, and concessions 
(a) Direct taxes 
49. Direct income taxes accounted for an estimated 70% of government tax revenue in 2009.  An 
estimated 37% of direct tax in 2009 was paid by individuals while companies paid some 30%.  
Mining and petroleum companies accounted for an estimated 22% of income tax.19 
50. Company taxes distinguish between resident and non-resident companies (branches).  
Resident companies, including mining firms, are taxed at a rate of 30% (raised from 25% from 2003) compared with a rate of 48% for non-resident non-mining companies and of 40% for non-resident 
mining firms.  Resident and non-resident petroleum firms are taxed at 45%, unless they earned profits 
before 2001, in which case the old rate of 50% app lies.  Concessionary tax rates of 30% apply to both 
resident and non-resident petroleum companies earning income by developing projects under 
                                                     
 
19 Other direct taxes include dividend withholding tax, interest withholding tax, and gaming tax. WT/TPR/S/239 Trade Policy Review 
Page 50 
 
 
petroleum prospecting licences (PPLs) granted be tween 2003 and 2007 inclusive, and petroleum 
developing licences (PDLs) emanating from these PPLs  issued before end-2007.  Resident and non-
resident gas companies are taxed at 30%.  Th e Additional Profits Tax (APT) was removed on 
petroleum and mining activities from the end of 2002, but  is still levied on the cash flow of designated 
gas projects.20  Dividends of non-petroleum firms are s ubject to a 17% withholding tax (reduced to 
10% for mining firms from 2001), which for non-resident firms or individuals represents a final tax on 
dividends.21  
51. Mining royalties are applied on the product's f.o.b.  export value or of net smelter returns is set 
at a rate of 0.75% and the mining levy is set at 4% of sales value.22  Royalties of 2% of well value of 
oil and an equivalent Development Levy are paid by petroleum and gas companies.23  Loggers also 
pay a complex array of compulsory taxes and "negotiated" payments to benefit landowners 
(Box III.2).  
Box III.2:  Taxation arrangements for logging 
Logging in PNG is subject to a complex myriad of compulsory taxes and "negotiated" payments designed to 
benefit landowners.  In addition to standard company income tax of 30%, the log export tax and the export 
development levy (Chapter III(3)(ii)), compulsory taxes are the timber royalty paid to landowners at varying rates depending on the log species and grade, but averaging K 13.50 per cubic metre, and dividend and 
royalty withholding taxes each of 5%.  "Negotiated" payments to landowners are the project development 
and the domestic sales benefit levies of K 23 and K 8-10 per cubic metre, respectively.  An extra K 2-3 per 
cubic metre is paid to the Department of Forestry as a reforestation levy, although no trees are planted.  
Additional payments can include an agricultural development levy, a spiritual levy, a shelter levy, a provincial government levy, and a business development levy, each of K 1-2 per cubic metre.  In recent 
years, the negotiated returns to landowners in project development agreements with the State have averaged, 
including the compulsory royalty, K 45-55 per cubic metre.   
Source:   PNG Forest Industries Association. 
52. The concessional income tax rate of 20% applie d for ten years to new agricultural projects 
commencing since 1 January 2004 was extended until  the end of 2011, and the minimum investment 
threshold lowered from K 5 million to K 1 million.  Operators of new large-scale or substantially 
improved tourism facilities with at least 100 rooms al so benefit from a similar income tax concession, 
provided construction started between 1 January 2007 and 31 December 2011 and involved minimum 
expenditure of US$7 million.  Seve ral general and sector-specific special income tax deductions and 
accelerated depreciation provisions assist various activities, including mining, petroleum, gas, agriculture, manufacturing, fishing, and tourism.  Research and development expenditure incurred 
from 1 January 2004 in all sectors under the Approved  Research and Development Plan is deductible 
for income tax purposes at 150%, as is expenditure on agricultural extension services under the 
Approved Primary Production Ex tension Services Plan.  Tour operators can double deduct 
expenditure on overseas marketing promotion (e.g. overseas media publicity and advertising, market 
                                                     
 
20 The APT was 35% for mining and 50% for petroleum income above returns of 20% and 27%, 
respectively, after the inve stment was fully recouped. 
21 Withholding taxes also apply to interest payments (at 15%) as well as on management fees (17%), 
royalties for use of intellectual property (30%), certai n contractors (12%), sea freight (2.4%), and insurance 
premiums (4.8%) paid to non-resident individuals or entities.  In some cases, the tax rates are reduced if the non-
resident is a resident of a country with which PNG has a double taxation agreement. 
22 The mining levy is calculated using a formula (Section 160 (F) of the Income Tax Act) aimed at 
requiring firms to pay an amount similar to the import dutie s payable in 1998 before th ey were replaced with the 
VAT. 
23 Where the development levy also applies, the royalty paid by petroleum firms is allowed as a tax 
credit instead of a tax deduction. Papua New Guinea WT/TPR/S/239 
 Page 51 
 
 
research, participation in trade fairs, public rela tions work connected with exporting, and overseas 
sales and office expenses) incurred from 1 January  2006.  A double deduction is allowed for 
employers incurring staff training costs (i.e. salarie s of apprentices and citizen employees undergoing 
full time training).  An infrastructure tax cred it scheme encourages firms to invest in public 
infrastructure by allowing such expenditure to be offset against income tax (Table AIII.2).  From 
1 January 2006 the maximum tax credit rate for agri cultural entities was raised from 1.0% (previously 
0.75%) to 1.5% of assessable income.  The ta x credit limit for all other sectors is 0.75%.  
(b) Indirect (commodity) taxes 
53. Indirect taxes accounted for an estimated 30% of  total government tax revenue in 2009;  49% 
was raised through GST and 34% from excises.  The Tariff Reduction Programme was largely 
financed through pre-requisite tax reforms from Ju ly 1999, including introduction of the VAT on 
goods and services (Goods and Services Tax (GST ) from 2004 under the Goods and Services Act 
2003), and extension of excise taxes to a range of leisure goods, including especially motor vehicles.  
Higher mineral tax revenue also helped offset lowe r than expected revenue from the introduction of 
the GST due to administrative problems (alt hough these have now subsided), but may have 
undermined further tariff reforms. 
GST 
54. The GST is levied uniformly at 10% on domestic  goods and imports i.e. the landed-duty-paid 
(including excise where applicable) price.  Exempt or zero-rated goods also include imports.  Only the 
sale of fine metal ("pure" gold or platinum) beyond the "first supply" and certain services, mainly 
financial, educational, and health services, are GST exempt24;  imported raw rice, which must be 
vitamin enriched in PNG to be sold, is also ex empt.  Zero-rated products include mainly exports.25  
The registration threshold remains at an annual tu rnover of K 100,000.  Subject to NEC approval, 
GST exemption may be granted on imported inputs, including equipment, as an investment incentive, 
on a case-by-case basis, especially for mining, petroleum, and gas projects.   
Excise taxes 
55. Excise taxes apply to the traditional "sin" pr oducts of alcoholic beverages and tobacco 
products, as well as petroleum goods and leisure items , such as perfume, pearls, diamonds and other 
precious stones, precious metals (e.g. gold and silver ), selected consumer electronics (e.g. televisions 
and video recording equipment), optical lenses, binoculars, certain gaming equipment (e.g. poker 
machines), arms and ammunition, and motor vehi cles, manufactured in or imported into PNG 
(Schedule 1 of the Excise tariff Act 1956).  Whil e, according to the authorities, they do not 
discriminate against imports (except for a 50% ex cise concession on alcohol made from locally grown 
fruit), the incidence of the excise tax falls almost  exclusively on imports, since these products are 
generally not produced in PNG.  Apart from alcoho lic beverages, tobacco, a nd petroleum products, all 
excise rates are ad valorem , ranging from 10% to 150%.  Non-petroleum specific excise rates are 
biannually indexed to inflation, capped at 2.5%, to maintain real levels.26   
56. Excise exemptions may be granted on imported inputs as an investment incentive on a case-
by-case basis, especially for mining, petroleum, and gas projects, subject to NEC approval.  The 
                                                      
24 Life insurance is GST exempt. 
25 Also zero rated are:  the supply of goods (excluding cars) or services used solely by a resource 
company;  new fine metal ("pure" gold or platinum) supplie d by the refiner to a fine metal dealer for investment 
or to a jeweller to make jewellery;  and crude oil supplied by the developer for refining. 
26 The six-monthly cap was halved from 5% to 2.5% from 2005. WT/TPR/S/239 Trade Policy Review 
Page 52 
 
 
fishing industry receives a excise tax concession on di esel, paying K 0.03 instead of K 0.06 per litre, 
and benefits from excise exemptions on outboa rd motors and "banana" boats (imported and 
domestically made).  Agriculture was also assisted by removing the 10% excise tax on tractors in 2005.  The excise tax on poker machines was cut from 150% to 50% in 2008 to help the gaming 
industry to modernize machines.  
(ii) Government procurement 
57. Government procurement continues to be used an instrument of economic policy and PNG is 
not a member of the WTO Agreement on Government .  Government procurement has been partially 
reformed by amending the relevant  legislation (the 1995 Public Finance Management Act (PFMA) 
in December 2003, following review by the Department  of Finance in 2001.  Associated changes were 
made in 2005 to the Financial Instructions ( Good Procurement Manual  and Financial Management 
Manual ).  In particular, public suppl y and tender boards were consolidated into a single independent 
Central Supply  and Tenders Board (CSTB), and new proce dures were introduced to ensure merit 
appointments and greater impartiality.  PNG h as therefore centralized national government 
procurement under the CSTB's overs ight, which administratively is under the Ministry of Treasury 
and Finance.  It "controls and regulates" all public  procurement except that of the three specialized 
tender boards (STBs), one of which handles pha rmaceuticals (Pharmaceutical Supply and Tender 
Board), and of major state-owned enterprises.
27  The CSTB is responsible for provincial government 
procurements worth over K 3 million.28  Its total annual procurement, estimated at some 
K 260-300 million, is thought to be a small shar e of the total government procurement market. 
58. Entities do their own procurement, but must submit proposed documents to the CSTB for 
approval and dispatch.  The CSTB sends bids to the procuring entity to be evaluated and selected.  It 
can reject the entity's selection, subject to right of appeal to the Ombudsman.  A standardized bidding document is being prepared that will incorporate standard evaluation criteria but also allow for 
project-specific criteria.  The CSTB is working w ith the Chartered Institute of Purchasing Supply to 
train officials.  Minor procurement (contracts below K 100,000) are handled, in practice, by the 
procuring entity, although the CTSB is to "contro l and regulate" it in principle.  The NEC must 
approve contracts over K 10 million (previously K 5 million).  All procurement contracts of 
K 300,000 and above (raised from K 100,000) must be tendered according to rul es in the bid manual.  
The general criteria for awarding contracts include  value for money, quality, transparency, and 
effective competition.  While the Good Procurement Manual  provides guidelines on establishing the 
lowest total cost bid, regulations do not require th is to win the contract;  the authorities indicated, 
however, that the lowest compliant bidder is awarded the contract.  The appeals process is 
undermined as it is not specified in the Act and ther e is an unclear demarca tion between the roles of 
the Ombudsman, the CSTB, and the Integrity  Panel in the Financial Instructions.
29  
59. Changes to the Financial Instructions in 2005 limited the gross misuse of non-competitive 
Certificates of Inexpediency (COIs) to bypass st andard tendering procedures specified in the PFMA 
by restricting their application to  natural disasters and other real emergencies approved by the CTSB.  
The CTSB is also trying to restrict their use to  where:  only a limited number of potential suppliers 
                                                      
27 The others are the Bougainville Infrastructure Supply and Tender Board and the Gazelle Restoration 
Supply and Tender Board. 
28 A provincial procurement board in each provin ce handles smaller contracts.  Bid-splitting to 
circumvent this amount is prohibited.  Very few provincial procurement contracts exceed K 3 million. 
29 STBs are to handle complaints internally, with appeals to the Ombudsman.  The Goods Procurement 
Manual requires the CTSB to oversee complaints, with app eals to the Integrity Panel (World Bank, 2006).  This 
independent panel reviews unresolved complaints against STBs and CTSB recommendations to blacklist 
suppliers. Papua New Guinea WT/TPR/S/239 
 Page 53 
 
 
exist and a call for tenders is unlikely to attract ex tra bidders (e.g. procurement of motor vehicles);  
suppliers are required in remote locations where few exist;  and funds have not been released in time 
to tender publicly.30  In 2004, CTSB approved 47 of 70 requ ests for such certificates;  however, the 
value of COI procurement still rose substantia lly, from K 15.0 million in 2003 to K 26.9 million 
in 2004.  With the annual number of COIs issued  currently exceeding 100 their use remains a major 
weakness in procurement practices.31  Also,  while not used recently, ministerial approvals have been 
sought to allow entities to conduct and evaluate thei r own government procur ement.  Moreover, the 
Finance Minister maintains authority to estab lish Specialized and Provincial Supply and Tender 
Boards that are subject to their own rules and not the general procurement le gislation and regulations, 
and to waive procurement processes for contracts below K 0.5 million. 
60. Local suppliers are routinely given procurement margins of preference of 7.5% on contracts 
of K 1-10 million.32  Procurement contracts below K 1 m illion are reserved for national suppliers 
(thought to be firms with at least 51% PNG equity).   Local suppliers win some 95% of tenders, with 
joint ventures encouraged for large projects.  Local  firms do not need to be registered to bid for 
procurement.  Foreign firms must be register ed with the IPA for doing business and be a PNG 
certified business under the PFMA.   
61. Despite improvements, public procurement rema ins inefficient, and further reforms could 
enhance performance and help ensure value for money.33  The private sector has identified several 
weaknesses in public procurement, including:  lack  of transparency with associated suspicion of 
corruption (abuse of Certificates of Inexpediency and splitting contracts to favour small firms);  no 
standardized documentation and evaluation;  poor di sclosure of awarded contracts;  discretionary 
issue of contracts;  poor quality documentation and contract management;  and procurement delays.  
The authorities indicated that technical assistance was needed to assist in implementing government 
procurement policies, including training of officials.  
(iii) Standards and other technical requirements 
(a) Standards, testing, and certification 
62. PNG has improved its system of setting standard s and conformity assessment.  The lead body, 
the government non-profit agency the National In stitute of Standards and Industrial Technology 
(NISIT), is responsible for developing, adopting, reviewing, and publishing  PNG National Standards 
(NISIT Act, 1993).  These are developed by c onsensus based on nine registered Technical 
Committees (including the Units Standards Calibrati on Committee), which have private- and public- 
sector representatives.  To the extent possible, the NISIT reviews and updates standards three yearly.  
They are available in hard and electronic form, and the NISIT website, established  in 2006, facilitates 
transparency.  The NISIT is the official WTO enquiry point under the TBT Agreement.  Standards and conformity assessment procedures are published in the PNG Standards Catalogue  and the 
National Gazette .  The NISIT conducts regular awareness semi nars to disseminate standards.  PNG 
has some 1,200 National Standards, covering mo stly mechanical and electrical technology 
applications.  Fish and fishery product standa rds were released in 2009.  The NISIT has a 
Memorandum of Understanding with Standards Australia and Standards New Zealand for technical 
                                                     
 
30 For remedial works or goods the Act and Financial Instructions provide for the Ministry of Treasury 
and Finance to authorize contracts under certificates for up to K 500,000 without public bidding. 
31 It is not clear, according to the authorities, who is responsible for declaring emergencies on which to 
base COIs. 
32 Preference margins are not specified in the legisla tion and are subject to cons iderable discretion, and 
hence could authorities indicated be larger in some circumstances. 
33 World Bank (2006), p. 14. WT/TPR/S/239 Trade Policy Review 
Page 54 
 
 
cooperation.  However, with no permanent Director  General or board since 2007, the NSIT has been 
unable to conduct its regulatory functions.   
63. Voluntary standards are developed by either  of two approaches. The "adoption process" 
reviews all foreign international and regional standa rds, which may be fully or partially adopted.  
Almost all PNG standards have be en adopted this way from ISO, IEC, Codex, Australian or New 
Zealand standards.  Hence, PNG has achieved s ubstantial progress in harmonizing standards with 
international norms (Table III.4).  The "in-econom y" process develops standards internally using 
domestic-based experts and involving stakeholders to  reflect PNG's unique requirements.  Only a few 
such standards exist, covering mainly construction, timber treatment and structures, green coffee, and 
alfatoxins.  Mandatory standards (i.e. technical re gulations) are contained in specific regulations, and 
are published by the NISIT in the Register of Mand atory Standards, Reference in the Legislation of 
PNG.  Technical regulations with input from NISI T, include the Bio-Safety Regulation (2008) and 
Food Sanitation Regulation (2007).  The NISIT has a Memorandum of Understanding with PNG 
Power on the implementation of electrical standards (essentially Australian and IEC standards), and 
with the Independent Consumer and Competition Commission.  Some technical regulations are 
adopted directly from Australia, e.g. the PNG Fire Code. 
Table III.4 
Harmonization of PNG standards, 2009 
(Per cent)  
Source of standard Share (%) 
International Organization fo r Standardization (ISO) 14 
International Electrotechnical Commission (IEC) 6 
American Society for Testing Materials (ASTM) 3 
CODEX 8 
American Petroleum Institute (API) 0 
ANSI/AWWA 2 
British Standards (BS) 3 
Australia/New Zealand 54 
Source: Chenyang and Scollay (2009), IAP Peer Review  Report 2009 PNG , pp. 83-84.  Viewed at http://www.apec-
iap.org/document/PNG_2009_2009_SOM2_014anx2_IAP_Revie w_Study_Report_ Peer_Review.pdf. 
64. Laboratories are accredited through the PNG Laboratory Accreditation Scheme (PNGLAS) 
administered by the NISIT.  The PNG has closel y resembles the Australian system, and is being 
prepared for JAS-ANZ Accreditation as a Conformity Assessment Body.  It is also being assessed under APLAC.  PNGLAS has adopted interna tional standards (ISO/IEC 17025), and accreditation 
must be renewed three-yearly.  There are 15 accredited laboratories;  11 cover construction material testing and the rest chemical testing.  The NISIT's Measurement Standards Laboratory (MSL) is PNG's only calibration laboratory accredited by the National Association of Testing Authority of 
Australia. 
65. PNG Certification Services (PNGCES), formed in 2006 and administered by the NISIT, is the 
national scheme for auditing and certifying compani es and organizations.  It currently certifies 
management systems to the four internationa l standards:  quality (ISO 9000), environmental 
(ISO 14000), Food (ISO 22000) and Hazard Analysis Critical Control Point (HACCP4). 
66. The NISIT accepted the Code of Good Practice fo r the Preparation, Adoption and Application 
of Standards contained in Annex 3 to the WT O Agreement on Technical Barriers to Trade in 
September 2006.  As well as being a member of the ISO, the IEC, and Codex, PNG through the NISIT is a full member of the Asia Pacific Laboratory Accreditation Cooperation (APLAC), the Asia Papua New Guinea WT/TPR/S/239 
 Page 55 
 
 
Pacific Laboratory Legal Metrology Forum (APLMF) , the Pacific Area Standards Congress (PASC), 
and the Asia Pacific Metrology Program (APMP).  In 2007, the NISIT became an Associate Member 
of the Pacific Accreditation Cooperation (PAC).  P NG, through the NISIT, seeks to establish mutual 
recognition agreements, and since 2006 has particip ated in developing the APEC Food Sectoral 
Mutual Recognition Arrangement.  It is also inter ested in participating in Part 1 of the APEC 
Electrical and Electronic Mutual Recognition Arrangements. 
(b) Health, sanitary, and phytosanitary regulations 
67. The National Quarantine Inspection Authority (NAQIA) implements PNG's quarantine 
measures (NAQIA Act 1997).  It endeavours to set  quarantine import measures based on pest-risk 
assessments using international standards to meet its multilateral obligations.  It seems that zero 
tolerance has been relaxed to "acceptable level of  protection" based on disease status and case-by-case 
assessment.  SPS requirements apparently are most r estrictive in the case of live animals and fish.  
However, owing to very limited resources, there is a large backlog of requests for export permission 
from trading partners;  they are treated on a "first-in first-out" basis as resources permit.  Due to insufficient laboratory testing facilities, import bans  are often used instead of restrictions.  The 
authorities noted the need for technical assistance in SPS areas, especially in updating laboratories and 
training personnel. 
68. Quarantine inspections are mainta ined permanently at 20 larger ports, with minor ports served 
as required.  Due to inadequate space, inspections are usually done off-wharf in designated quarantine 
areas.  All import consignments must be inspected, in principle, but this can be waived if the risk is 
known to be low. 
(iv) Competition policy, law, and consumer protection 
69. The Government supports greater competition in key service sectors to increase efficiency, 
lower prices, improve qualit y, and promote innovation.
34  The Independent Consumer and 
Competition Commission (ICCC), established in 2002 (ICCC Act 2002), promotes competition, fair 
trading, and consumer protection;  economic efficiency;  investment;  and good business conduct.35  It 
enforces competition policy, especially as economic regulator of the state-owned monopoly utilities of 
electricity, ports, postal services, (compulsory) th ird-party motor-vehicle insurance, water and 
sewerage services in Port Moresby (Port Moresby Water and Sewerage  Ltd, trading as Eda Ranu Ltd) 
and elsewhere (PNG Waterboard), and, until recently , telecommunications (Chapter IV(6)(i)).  The 
authorities indicated that technical assistance is required in the application and enforcement of 
competition policy, including law. 
(a) Regulatory responsibilities 
70. The ICCC regulates the state-owned entities directly, supplying services through contracts not 
exceeding ten years that stipulate prices and quality sta ndards (Parts 3 and 4 of the of the ICCC Act).  
The ICCC's regulatory frameworks are contained wi thin these potentially broa d-ranging contracts and 
various laws and industry Codes of Practice (Box III. 3 and Chapter IV).  The regulatory regime aims 
to ensure utilities invest sufficiently to upgrade fac ilities, set tariffs that reflect economic costs of 
supply, earn appropriate rates of return, and deliver required service standards. 
                                                      
34 Government of PNG (2010b), p. 69. 
35 The ICCC, formed from the Consumer Affairs Co uncil and the Price Control Unit of Treasury, is 
accountable to Parliament. WT/TPR/S/239 Trade Policy Review 
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Box III.3:  Regulatory cont racts under the ICCC Act 
Regulatory contracts issued by the Minister  or the ICCC shall (Sections 34 and 35): 
(a) not exceed ten years; 
(b) regulate prices over the contract's term; (c) specify service standards, and payments to be made to customers and other persons (whether by 
rebates or otherwise) or price reductions which may be imposed, if not met;  and 
(d) specify a process to issue a replacement contr act on expiry, including the pricing policies and 
principles to be adopted. 
Regulatory contracts may regulate prices as the Mi nister or ICCC considers appropriate, including: 
(a) fixing the price or the ra te of increase or decrease; 
(b) fixing the maximum price or maximum rate of increase or minimum rate of decrease; 
(c) fixing the average price or an av erage rate of increase or decrease; 
(d) specifying pricing policies or principles; (e) specifying a price determined by reference to a general price index, production costs, rate of return 
on assets employed or any other specified factor; 
(f) specifying a price determined by reference to quantity, location, period or other specified factor  
 relevant to supply; and 
(g) fixing a maximum revenue, or maximum rate of increase or minimum rate of decrease. 
Regulatory contracts may also: 
(a) specify conditions relating to prices; 
(b) provide how the ICCC is to perform a calculation or determine an issue; 
(c) require the regulated entity to provide certain in formation to the ICCC, customers or other persons; 
and 
(d) specify restrictions or limitations on how the ICCC or any other statutory authority exercises its 
functions;  and legislative powers on the regulated entity or the suppliers of regulated goods or 
services. 
Regulatory contracts issued by the ICCC shall in addition to its legislative objectives consider (section 35): 
(a) legitimate business interests of the regulated entity, its suppliers and customers; 
(b) particular circumstances of the industri es in which the regulated entity operates; 
(c) nature and uses of the regulated good or service; (d) costs of making, producing, and supplying the regulated good or service; 
(e) compliance costs of applicable laws and regulatory requirements; 
(f) return on assets required to sustain past and future investment in the relevant industry; (g) relevant international benchmarks for prices, cost s, and return on assets in comparable industries 
taking into account PNG circumstances; 
(h) contract's financial implications for the re gulated entity and for the relevant industries; 
(i) factors specified by this or any other legislation. 
Source:   ICCC Act 2002. 
71. Majority state-owned or controlled entities (inc luding those that have been privatized for 
under three months) can be "declared" to be regulated by the Treasurer (Section 32 of ICCC Act).  
The ICCC may also "declare" any such entity within a regulated industry or any good or service of a 
regulated entity to be regulated where the entity has a "substantial degree" of market power (non-
defined) and this would comply with its  legislative objectives (section 33).   
(b) Competition law 
72. Market conduct rules prohibit a number of ty pes of commercial conduct or arrangements, 
including by state-owned entities, because they harm competition (Part 6 of the ICCC Act).  Papua New Guinea WT/TPR/S/239 
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Prohibited are:  contracts, arrangements or unders tandings that "substantially lessen competition";  
exclusionary agreements between competitors to pr event or limit dealings with another competitor 
(i.e. primary boycotts); price-fixing agreements am ong competitors;  using "substantial" market power 
anti-competitively, i.e. to restrict entry of compe titors, to prevent or deter competitive conduct, or to 
eliminate a competitor;  and resale price maintenan ce.  The ICCC may authorize such conduct if it 
assesses it would generate sufficient public benef its to outweigh the anti-competitive effects 
(Section 70).  Parties proposing such anti-competitive conduct must obtain ICCC authorization;  e.g. 
in late 2008, after a public inquiry, the ICCC aut horized code-sharing arrangements between Airlines 
PNG and Pacific Blue on the Port Moresby/Brisbane  route as pro-competitive (Chapter IV(6)(iv)(a)). 
73. Mergers or acquisitions that "substantially l essen" competition in the relevant market are 
prohibited, and must be approved by the ICCC.  If requested, it can clear a proposed merger or 
acquisition (Section 81) if it is satisfied it would not substantially lessen competition, may or if 
convinced it would produce positive public benef its that outweigh the anti-competitive impact 
(Section 82).  Authorization involves two stages:  the ICCC assesses the an ti-competitive effects of 
the proposed merger or acquisition;  if found to substantially lessen competition the ICCC then 
determines whether to allow it on public benef it grounds.  The ICCC also conducts post-merger 
investigations to ensure their legality.   
74. The ICCC enforces competition law by invest igating alleged viol ations and applying 
remedies.  It screens complaints to assess whether th ey constitute prima facie illegal cases.  If so it 
undertakes detailed analysis.  Remedies include the I CCC taking legal action in the National Court to:  
impose pecuniary penalties (up to K 10 million per c ontravention);  issue injunctions to restrain 
unlawful conduct;  order assets illegally acquired to be  divested;  and to ban individuals from being 
company directors or managers for up to five year s.  Private legal action is also allowed to seek 
injunctions (other than for mergers and acquisitions ) or damages incurred from illegal activities.  Only 
two proposed mergers and acquis itions have been found unlawful.36  The ICCC has pursued abuse of 
market dominance and price fixing;  it is currently investigating complaints involving exclave 
dealings.  Where breaches are found, the ICCC cautions  the parties to cease such conduct.  No private 
litigation for competition law breaches has occurred.   
(c) Public inquiries 
75. The ICCC has conducted government reviews of air transport, coastal shipping, stevedoring, 
general insurance, tourism, wholesale and retail trad e, and water and sewerage;  these requests may be 
made by the relevant minister or by Parliame nt (Section 124);  the ICCC may self-initiate such 
reviews.  They involve public inquiries, with the ICCC first releasing an Issu es Paper, followed by a 
draft report for public comment.   
(v) Price controls and monitoring 
76. Certain declared "essential" goods and services ar e subject to either price control (Section 21) 
or price monitoring  (Section 32) to benefit consumers (Prices Regulation Act, Chapter 320).  The 
ICCC administers these measures through General Pri ce Orders.  The ICCC is currently monitoring 
only the prices of flour, rice (white and brown) and s ugar at the factory gate on a quarterly basis.  All 
prices have been deregulated in recent years, in cluding of tinned fish and tinned meat, as well as the 
wholesale and retail margins of flour, rice, and suga r.  Wholesale and retail margins on fuel products 
are controlled, but the ICCC is currently reviewing the price-setting arrangements for fuel products to 
apply for the new regulatory period from 2010.  Fu el (petrol, diesel, and kerosene) prices, public 
                                                      
36 These involved a proposed merger in 2004 between Datec and Daltron Electronics, and a proposed 
acquisition by InterOil Ltd in 2009 of Shell Oil Products  Ltd aviation refueling assets at Jacksons Airport. WT/TPR/S/239 Trade Policy Review 
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motor vehicle and taxi fares, water and sewerage rates are controlled directly by the ICCC, which 
must approve any increases.  It monito rs stevedoring and handling charges. 
(vi) State-owned enterprises and privatization 
77. State-owned enterprises dominate many key service infrastructure industries, such as 
electricity, telecommunications, aviation, water a nd sewerage, postal services and ports.  Improving 
their efficiency would significantly enhance PNG's competitiveness and economic performance.  Inefficient dominant state-owned entities continue to be a drag on economic growth and national 
finances.
37  Therefore, it is important to reform state-owned entities by increasing accountability, 
strengthening governance, and openi ng to competition those facilities dominated by the public sector, 
e.g. air transport, ports, and electricity.38  The Government has equity shares, usually with foreign 
investors, in petroleum, gas, mining, and seemingly some agricultural holdings and food processing activities. 
78. PNG's privatization programme has progressed slowly.  The previous Government's 
ambitious programme, which included divesti ng the PNG Banking Corporation, Telikom PNG 
Limited, PNG Harbours Limited, Motor Vehicles In surance Limited, and Air Niugini Limited, was 
suspended in August 2002 with the NEC endorsing a comprehensive review.  Only the PNG Banking 
Corporation, which merged with Bank South Pacifi c, had been divested.  Government policy on 
divestment currently seems to be based on mainta ining substantial government equity and replacing 
privatization with public/private "partnerships", as pe r the sale of 50% of Telikom's mobile subsidiary 
BMobile, in 2008 (Chapter IV).  The poor performance of SOEs continues to be a major constraint on 
private-sector development by raising costs and damaging competitiveness;  some private ownership 
would improve this situation.
39 
79. The Independent Public Business Corporation of PNG (IPBC), formed in 2002, reports to 
Parliament.  It holds most state-owned commercial assets in trust aimed at improving their commercial performance (I PBC Act 2002, as amended).
40  It succeeded the Privatisation Commission 
when the Privatisation Act (1999) was repealed, a nd had net assets worth K 1.7 billion in 2007.  It 
also oversees the Government's privatization initiatives.   T h e  IPBC is the nominee for the 
Government's 19.4% equity in the proposed LNG project led by ExxonMobil (Chapter IV).   
80. The ICCC has reviewed the regulatory contracts of SOEs to complement their transition to 
commercialization in a pro-competitive environment, and has made recommendations to the Ministry 
of Treasury and Finance.41  The most recent was the PNG Harbours Regulatory Contract Review in 
2009, which provided for significant transitional pr icing arrangements.  It replaced the uniform 
pricing with a cost-reflective-pricing approach , considered necessary to enable PNG Ports 
Corporation Ltd (PNG Ports) to undertake capital work s on its port facilities and to continue operating 
loss-making ports.  Forthcoming reviews will be held  on the Postal Services Regulatory Contract, the 
Compulsory Third Party Motor Vehicle Insurance Re gulatory Contract, and the Electricity Regulatory 
Contract. 
                                                      
37 ADB (2010), p. 245. 
38 ADB (2010), p. 275. 
39 Minister for the Treasury (2006). 
40 Its portfolio is Air Nuigini, Eda Ranu, Krot on No. 2, Motor Vehicle Insurance, National 
Development Bank, PNG Ports Corporation, PNG Power, PNG Waterboard, Post PNG and Telikom PNG. 
41 PNG Government (2010b), p. 69. Papua New Guinea WT/TPR/S/239 
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(vii) Agricultural marketing boards 
81. Major export tree crops are administered by st atutory marketing boards, which report to the 
Government through the Minister for Agriculture but maintain their autonomy through grower-controlled boards.  The main board s are the Cocoa Board, the Coconut  Industry Corporation (replaced 
the Copra Marketing Board in May 2002), the Coffee Industry Corporation, the Spice Industry Board, 
the Oil Palm Industry Corporation, and the PNG Rubber Industry Corporation (Chapter IV).  The 
boards are established by legislation that provid es broad powers, including:  collecting levies from 
growers, exporters and im porters to fund operations, including price stabilization schemes; controlling 
sales, including exports, and associated licensing of traders and sellers;  setting quality standards, 
conducting inspections, and certifying exports;  providing farm extens ion services;  and financially 
assisting growers, for example, to rehabilitate crops.  The Authorities indicated that all price stabilization schemes and corresponding grower levies  ceased some time ago.  Government subsidies 
are granted periodically, e.g. the government has allocated K 2 million to the coffee board annually since 2008.  Marketing functions are provided by lic ensed private operators, except for rubber, which 
remains the only state controlled and managed industry.
42  The efficiency and rationale for such 
marketing boards is questionable, and they may be impeding agricultural development.  
(viii) Intellectual property rights 
82. Since its last Review, PNG has taken signifi cant initiatives to implement a comprehensive 
and effective system to protect intellectual pr operty.  Since 2005, it has reviewed and amended 
long-standing legislation, especially the Trade Marks Act (operative from 1980), as well as the Patent 
and Industrial Design Act 2000, and the Copyright and Neighbouring Rights Act 2000 (both entered 
into force in 2002).  These reforms, awaiting issuan ce of Certificates of Necessity by the Attorney 
General's Department, include :  amending the Trade Marks Act to possibly add geographical 
indications, as well as border control measures an d well-known marks, and to reflect the Madrid 
Protocol, to which PNG wishes to accede43;  incorporating the provisions of the Patent Cooperation 
Treaty (PNG joined in June 2003), and compulsory licensing into the Patents and Industrial Design 
Act;  and allowing for the establishment of collectiv e management organizations in the Copyright and 
Neighbouring Rights Act (Copyright and Nei ghbouring Rights (Collective Management 
Organisations) Regulation).  A stud y is examining the feasibility of establishing CMOs in PNG.  The 
authorities believe that amendments to the Trade Marks Act will bring it into compliance with the 
TRIPS Agreement and that the two other laws alre ady comply.  PNG is yet to ratify the Singapore 
Trademark Law Treaty. 
83. Intellectual property legislation is administered by the Intellectual Property Office of PNG 
(IPOPNG), which operates a property rights granting and registration system.  The World Intellectual 
Property Organization (WIPO) installed an IP automation system (IPAS) in 2006 to fully automate trade mark registration and the administration of processing patent and industrial designs.  IPOPNG's 
data base has over 19,000 registered trade marks.  IP Australia helps IPOPNG in the search and 
substantive examination for patent  applications under a cooperative a rrangement reached in 2003, and 
renewed in 2009.  IPOPNG granted its first patent  in February 2005 and with WIPO's assistance is 
considering whether to set up a Patent Information Ce ntre, but is concerned by the cost implications.  
Computer programs and databases are protected under the copyright legislation as derivative works.  With the assistance of the WIPO, IPOPNG has drafted a National Intellectual Property Strategy for 
the Government to consider.  The National Inte llectual Property Rights Committee (NIPRC) was re-
                                                     
 
42 Government representatives also sit on these boards. 
43 WTO document IP/N/1/PNG/2, 15 November 2005.  The authorities indicated that adopting 
geographical indications is not a priority, and that since the IPOPNG has no experience in administering them, these intended provisions may be repl aced by certification marks,  which they see as serving the same function. WT/TPR/S/239 Trade Policy Review 
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constituted in April 2008 to serve as a consultative, advisory, and review authority on all policy and 
legislative matters relating to intellectua l property, including enforcement.   
84. Enforcement remains a major challenge, with  PNG facing widespread increases in the 
importation, reproduction, and sale of counterfeit a nd pirated goods.  IRC/Customs has implemented 
regulatory measures to assist IP owners enforce their rights at the border (Part VI of Customs 
(Prohibited Imports) Regulation Ch 101).  Right ho lders may ask Customs to suspend clearance of 
suspected illegal imported goods but they must provi de prima facie evidence .  Customs may also 
initiate such action ex officio provided the right ow ner is registered with Customs and has signed a 
waiver protecting it from future court action from an y such seizure;  in 2008 there were only three 
registered right owners.  Customs and IPOPNG signed a Memorandum of Understanding in 2010 to 
facilitate coordination and information shari ng.  Parallel imports are not prohibited. 
85. The authorities indicated that substantial techni cal assistance was needed to improve PNG's 
capacity to implement intellectual propert y legislation, including enforcement.