Statement of the United States by Ambassador Michael W. Punke
February 23, 2016
FOR THE RECORD
Thank you, Chair. I’d like to begin by expressing the United States’ deepest condolences to everyone in Fiji affected by Tropical Cyclone Winston this past weekend. The United States stands ready to support the Government of the Republic of Fiji in its response to this disaster. The U.S. Office of Foreign Disaster Assistance is providing humanitarian aid for critical relief supplies and basic water, sanitation, and hygiene assistance. I understand a USAID disaster expert is already on the ground in Suva working with the Government to help conduct damage assessments, identify needs, and coordinate response efforts.
Though its population is less than one million, Fiji’s relatively small size belies its important regional role. It is a key economic and commercial hub in the South Pacific, and a leader among the Polynesian island states. Its trade and economic policy decisions therefore have an important multiplier effect throughout the South Pacific region. In addition, no discussion of Fiji’s role in multilateral organizations like this one can neglect to mention Fiji’s record of strong commitment to participation in UN Peacekeeping operations. We are pleased to work with Fiji as an important player in the global community.
The years since Fiji’s last Trade Policy Review in 2009 have seen some critically important developments within Fiji. Most notably, a new constitution was introduced and democratic government restored in 2014. This is an important milestone for Fiji’s people. We have congratulated the people of Fiji on this important achievement, which paved the way for the full restoration of our historically close bilateral relations. One of the key challenges of the coming years will be to further strengthen democratic institutions and governance, and build on them to implement policies that will generate sustainable, broad-based growth and trade.
The Secretariat report notes Fiji’s solid growth of recent years, and in particular an uptick in growth over the past three years compared to the preceding three. We agree that a basically sound economic policy framework has been implemented, and commend the Fijian government for the steps it has taken to restore growth after the 2009 recession. We note the evolution in Fiji’s goods and services trade, from one based principally on food and primary products exports, such as sugar and fish, to a more diversified array of exports, including services like tourism. We also note the growing diversification of Fiji’s trade partners, on both the import and export side. We are pleased to see that since Fiji’s last Review, the United States went from being Fiji’s fourth largest export market to its largest — which underscores the continued interest of the United States in deepening our trade ties with Fiji and being an important partner in Fiji’s development. The policy objectives for the coming decade set forth in the Fijian Trade Policy Framework announced last summer seem appropriate and reasonable ways to seek to deepen Fiji’s integration into the global economy and to increase the benefits to Fijians from international trade.
The Secretariat report notes that Fiji has been growing above its estimated potential rate for the last few years. Nonetheless, in addition to its chronic challenges of distance, small market size and natural disasters, Fiji continues to face numerous man-made bottlenecks and impediments to growth. If Fiji is to fully realize the economic ambitions of its citizens, and fully join the economic dynamism of the Pacific region, it will need to address these bottlenecks. As friends and international partners of Fiji, we should use this review to focus not just on the positive developments, of which there are many, but to highlight a few key issues that could potentially prevent Fiji from sustaining the positive trends of recent years.
To start, in order to deepen its integration in the global economy, we believe Fiji should focus not just on increased access to export markets but on removing impediments to competitive foreign products, which will both benefit Fiji and strengthen its key trade relationships. Fiji’s average applied tariff of over 11 percent (and average bound rate of 40 percent) remains rather high, particularly since Fiji’s regional trade agreements cover only about 7 percent of Fijian imports. Fiji’s report for this review, highlighting the central role of Doha Development Agenda in its trade liberalization policy, was clearly written before the MC10, but it would be useful to hear how, following the outcomes of the Nairobi meeting, Fiji is planning to approach future tariff liberalization. In a world, and Pacific region, where countries are cutting tariffs, Fiji’s relatively high tariffs impose added costs on its people, and diminish its attractiveness as a trading partner.
Fiji could also benefit from more active participation in other WTO agreements. The Secretariat report notes that Fiji has not yet notified its Category A commitments under the Agreement on Trade Facilitation. We strongly encourage Fiji to do so. This step is an important signal of commitment to the WTO system, but will also help address customs and trade facilitation issues, which continue to add complexity to trading with Fiji. We also strongly encourage the full implementation of the single window concept, in consultation with trade stakeholders.
We would also encourage Fiji to give serious consideration to joining other WTO agreements. The Agreement on Government Procurement would build on commitments to openness and transparency that Fiji has already implemented domestically, while also opening up new export opportunities for Fijian producers. The Information Technology Agreement would facilitate the development of information and communication industries, which Fiji’s National Export Strategy has identified as a priority sector.
The Secretariat report notes that the elimination of Fiji’s remaining exchange rate restrictions would strengthen the business climate and encourage more foreign investment. We would encourage Fiji to consider eliminating these restrictions. We also note that unpredictable changes in tax policy, particularly those that appear to target key foreign investors, as has happened in the past, can take a serious toll on international perceptions of a nation’s investment climate. Finally, we note that elimination of tax loopholes would broaden the tax base, thus diminishing the importance of tariffs as a share of overall tax revenues, and offer scope for further trade liberalization.
Domestic regulatory reform would also help address bottlenecks. For example, U.S. stakeholders continue to note the lengthy process of obtaining government approvals as a significant impediment to doing business in Fiji, while the World Bank’s Doing Business survey indicates that Fiji’s “starting a business” score is by far the worst of the ten component parts of Fiji’s overall score. It takes more than twice as many days to start a business in Fiji (58) as the East Asia and Pacific average (26). Streamlining this process would facilitate trade, investment and growth.
Finally, greater stability in the labor situation would both make Fiji a more predictable business climate and strengthen ties with key partners. We are encouraged by a number of recent amendments to the Employment Relations Promulgation Act, both passed and proposed, particularly with respect to “essential national industries,” and by indications of greater harmony in government-labor relations, and urge continued progress.
These recommendations are offered as a friend. Fiji’s performance of the past few years is much to be proud of. We hope to continue working in partnership with Fiji to further improve its trade and investment climate and sustain that strong performance in the years to come.