WT/TPR/M/409
28 May 2021
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Trade Policy Review Body 14 and 16 April 2021
TRADE POLICY REVIEW
TONGA
MINUTES OF THE MEETING
Chairperson: H.E. Dr Athaliah Lesiba Molokomme (Botswana)
CONTENTS
1 INTRODUCTORY REMARKS BY THE CHAIRPERSON ...... 2 2 OPENING STATEMENT BY THE REPRESENTATIVE OF TONGA ...... 4 3 STATEMENT BY THE DISCUSSANT ...... 7 4 STATEMENTS BY MEMBERS ...... 10 5 REPLIES BY THE REPRESENTATIVE OF TONGA AND ADDITIONAL COMMENTS ...... 22 6 CONCLUDING REMARKS BY THE CHAIRPERSON ...... 27
Note: Advance written questions and additional questions by WTO Members, and the replies provided by Tonga are reproduced in document WT/TPR/M/409/Add.1 and will be available online at http://www.wto.org/english/tratop_e/tpr_e/tp_rep_e.htm.
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1 INTRODUCTORY REMARKS BY THE CHAIRPERSON
1.1. The second Trade Policy Review of Tonga was held on 14 and 16 April 2021. The Chairperson, H.E. Dr. Athaliah Lesiba Molokomme (Botswana), welcomed the delegation of Tonga, headed by the Honourable Tatafu Moeaki, Minister for Trade and Economic Development; Her Excellency, the Honourable Fanetupouvava'u Tu'ivakano, the London-based High Commissioner and Permanent Representative of Tonga to the WTO; the rest of the delegation from Nuku'alofa; and the discussant, H.E. Ambassador Mikael Anzén (Sweden).
1.2. The Chairperson was pleased that, in addition to physical presence, the meeting also benefited from the Interprefy online connection, allowing for a wider participation of the Membership, in particular of officials who could not make the journey from Nuku'alofa given the current circumstances.
1.3. The Chairperson recalled the purpose of TPRs and the main elements of procedures for the meeting. The report by Tonga is contained in document WT/TPR/G/409, and that of the WTO Secretariat in document WT/TPR/S/409.
1.4. Questions by the following delegations were submitted in writing before the deadline: the United States; the European Union; Canada; Australia; Japan; and New Zealand. The following delegations submitted written questions after the deadline: China; and Brazil.
1.5. During the previous TPR meeting on 11 and 13 February 2014, Members had commended Tonga for its stable economic growth but had noted several sources of uncertainty, including its exposure to severe natural disasters, its narrow export base, and its reliance on remittances and donor support. For the current Review, Members, through their advance written questions, sought information regarding the impact of the COVID-19 pandemic, foreign exchange controls, and recent tax reforms.
1.6. Members also recalled that, at the time of the previous Review, while stressing Tonga's ambitious accession commitments, its open and liberal trade regime - even in a challenging environment - and its efforts to develop its legislation and administrative capacity so as to improve ease of doing business and attract more investment, they had expressed some concern about its capacity to fully exploit existing preferences available within the import schemes of some Members. As indicated by the advance written questions for this Review, several Members wished to have more details on: WTO notifications; participation in the Joint Statement Initiative on micro, small and medium enterprises (MSMEs), related statistics and RTA provisions in support of MSMEs; and changes on the new Foreign Investment Regulations and the Reserved and Restricted Lists.
1.7. With regard to trade policy, at the time of the previous Review, Members had welcomed Tonga's relatively low tariffs, and had encouraged it to keep all applied tariff rates within bound levels and to ensure uniform treatment of all imported and domestic like goods under its excise tax regime. Its wide-ranging services commitments and its efforts to strengthen the management of state-owned enterprises had been commended, and the importance attached to improving its SPS regulatory and institutional framework had been acknowledged.
1.8. For this Review, in their advance written questions, some Members expressed interest in learning more about developments in certain areas, such as: customs clearance procedures, import licensing requirements, TBT, SPS, trade policy measures on non-communicable diseases, government procurement, and intellectual property rights.
1.9. In terms of sectoral trade policies, Members were interested in having more clarity on: rationale for absolute import prohibition of meat of lamb and mutton breast; agriculture activities supported by government development loans; measures to combat illegal, unreported, and unregulated fishing; offshore mining and tourism developments; support to transport service providers; and prospects for tourism recovery to pre-pandemic level.
1.10. Tonga had received around 84 advance written questions from eight delegations for this Review as at 12 April 2021.
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1.11. This meeting was a good opportunity for Members to discuss in greater detail issues of interest to them and of systemic importance to the multilateral trading system. It was also an opportune moment for Tonga to update the Membership on the impact of COVID-19 on its economy, and measures it had taken in response. The Chairperson looked forward to a fruitful exchange.
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2 OPENING STATEMENT BY THE REPRESENTATIVE OF TONGA (HON. TATAFU MOEAKI)
2.1. Greetings from Tonga. I am very pleased to join you virtually today for Tonga's 2021 Trade Policy Review. Allow me to begin by thanking Your Excellency for convening this meeting, including your opening remarks. I would also like to acknowledge His Excellency Mikael Anzén of Sweden for acting as discussant today.
2.2. Let me also extend our thanks to the Secretariat for their ability to deliver this report, under restricted circumstances. More importantly, I wish to extend our congratulations to Dr. Ngozi Okonjo-Iweala on her appointment as Director General, and to extend our absolute best for her tenure at the Office.
2.3. This is Tonga's second Trade Policy Review since we joined the WTO in 2007. As a non-resident delegation, our engagements have been disrupted, but thanks to technology and to the WTO Secretariat in shifting to virtual working arrangements, we can proceed business as usual.
2.4. Tonga, as a small island economy, with a population of 100,000, has remained stable in the last two decades. Although not the smallest Member of the WTO, we are in the most isolated region in the Pacific. I raise this at the outset because Tonga faces many of the challenges typical of small island economies, including geographic isolation, our very limited human and financial resources, very small domestic market, and high costs of conducting business and service delivery. The economy is narrowly based and depends on inflows of remittances and external assistance to supplement our domestic revenue. The development of our economy is frequently disrupted by natural disasters. Tonga is one of the world's most exposed countries to climate change and natural disasters. It had suffered the highest loss from natural disasters in the world (as a ratio to GDP) in 2018 and is among the top five over the last decade in the world. This will be certainly worst by the impacts of climate change.
2.5. The main challenge for Tonga in the medium term is to improve its growth potential and to create jobs for the young population, where our Ministry is responsible to ensure trade gains are achieved from eligible preferences and regional trade agreements. Our Government's limited administrative capacity forces us to do things a little differently. We have to be more selective in the implementation of our reforms, resulting in substantial changes taking longer to implement and often resorting to external capacity to assist with reporting requirements.
2.6. Looking back at our first TPR, in 2014, we were struggling with the full implementation of our commitments, uncertainties, export ban, global pandemic and with managing the consequent disruptions, natural disasters and external shocks to our economy. Since then, over the years, we have taken steps to progress the implementation of our obligations. For example, Tonga Trade Policy Framework is our first comprehensive trade strategy which was launched in 2020, it includes a systematic analysis of our trade needs, together with a more coordinated framework for improving the country's trading environment to foster a whole-of-government approach to address the challenges that we have prioritized. During this period, Tonga signed the PACER Plus free-trade agreement, which came into effect in December 2020. This will be, upon significant development of our readiness capacity, can offer the most economically significant trade agreement that Tonga has joined outside the WTO.
2.7. The second major regional achievement has been the enormous growth of international labour mobility. For Tonga, the number of workers travelling to Australia and New Zealand under seasonal programmes has grown by an annual average of 14% since 2014. This numbers employed equivalent to one fifth of the full-time workforce in the economy. These workers' savings and remittances now amount to 9% of GDP, which has contributed to maintain our net remittances at over 30% of GDP even 12 months after the global pandemic. Preparations are underway to extend the scheme to include skilled workers.
2.8. With the onset of technology and improved internet access since the introduction of the fibre optic submarine cable in 2013, ICT is an area in which Tonga has experienced advancement in terms of rapid growth in internet access, affordability and use since the introduction of the fibre optic submarine cable. Internet access has tripled from 2013 to 2019 and prices have reduced more than halved during the same period and expect to drop further alongside market growth. Tonga completed its National E-commerce Readiness Assessment which was launched in 2020 alongside our Trade
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Policy Framework. This Assessment identifies the key issues and priorities for the Government of Tonga to consider to fully realize the benefits of digital revolution.
2.9. The structure of our economy has changed little in the last decade where the services sector (public administration, trade, and tourism) is estimated to be at 51.3% of economic output; the industrial sector (manufacturing, utilities, and construction) increased to 13.7%; and the primary sector (agriculture, forestry, and fishing) decreased to 17.9%.
2.10. There have also been major challenges in recent years. Tonga held second place in the World Risk Index in 2020, due to our extreme exposure to natural disasters and climate change. The country expects about two tropical cyclones a year, one of which is likely to be category 4 or 5. In 2018, cyclone Gita caused damage estimated by the World Bank at 38% of GDP, but Tonga has experienced significant further damage from cyclones Tino and Harold in 2020 even during the reconstruction period. Both reconstruction and building resilience are permanent areas of work, and building trade and economic resilience is an important component of that.
2.11. Looking further into the future, the IMF's Climate Change Policy Assessment in 2020 estimated that the resilience work needed to prepare for a climate change would cost over 140% of GDP. In this context, Tonga welcomes the recent launch of Structured Discussions on Trade and Environmental Sustainability. There are important trade policy dimensions to the climate crisis and it is right that Members should not only participate, but look beyond their immediate commercial interests to find and implement solutions that will mitigate the collective harm that climate change will bring.
2.12. A second major social challenge that has important implications for our trade policy is the rise of non-communicable diseases, including heart disease, cancer and diabetes. Tonga has one of the highest rates of obesity in the world, and NCDs have reached a critical level. Alongside a number of other factors, the rise in consumption of cheap and unhealthy imported food products has contributed to this crisis, and the Government has opted to use trade policy to implement its cross-government policy agenda including the introduction of prohibitions of certain unhealthy products.
2.13. It is a difficult moment to reflect on the long-term trends or future of our major industries. Tonga responded to the coronavirus pandemic by restricting international travel, and in health terms this strategy has been effective. For us, prior to the COVID-19, a growing tourism industry accounted for 15% of our GDP and was set to play an even bigger role in the future, based overwhelmingly on foreign visitors. COVID has reduced visitor arrivals to zero. However, our GDP industry statistical out-turns are obviously inconsistent and fail to reflect the negative impact of the travel restriction on the tourism sector, suggesting the need to use trade policy for services to ensure our tourism industry proceeds prior to the pandemic are real and accurately recorded even post COVID-19.
2.14. Tonga seems to be at the tail ends of the same inconsistent application of the trade policy, for example in services, where Tongan subjects have to pay difficult to afford 'international fees' to benefit from a particular service within our region but it is not the case in like developed regions.
2.15. Tonga continues to face difficulties in meeting Technical Barriers to Trade and Sanitary and Phytosanitary measures set by importing countries in terms of our merchandise export which most of the time is too difficult for our capacity to comply. Kava is an important agricultural commodity for Tonga like many friends of Kava in the Pacific, it is an integral part of our cultural and social life. Kava is a beverage that remains the main stay of trade at present to our diaspora around the world whilst commercial restrictions constrain us profoundly. The recent adoption of Kava Codex, will continue to be the largest window of opportunity that can benefit our country but remains unleashed due to many issues such as kava standards and stringent requirements from importing countries, whereby in most times find it difficult to understand its consistency in other regions.
2.16. Our isolation also creates close links between tourism and much of our international goods trade. Planes carrying tourists into Tonga enable high valued goods such as marine products to be carried out at a cost that, despite our extreme distance from major markets, allows us to be competitive in a few sectors. It is too early to understand the full effects that the recent and ongoing loss of air freight will have on those industries, but it is reasonable to expect the pandemic to jolt the country's long-term development trajectory in ways that will not be fully clear for some time.
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2.17. Among our priorities, the foremost is the possible conclusion of a fisheries subsidies agreement — which could have a profound impact on the future development of a sector that plays such an important role in our society. At one end of the spectrum, commercial exports of fresh fish represented 20% of merchandise exports prior to the pandemic, and we are optimistic that meaningful limits on the level of subsidies granted to distant water fleets could leave more space for small island States to cultivate their fisheries without unfair competition. But away from our commercial fleets, fisheries are central to our communities and history, and play a role in the livelihoods of our most remote islands.
2.18. Tonga has also been closely monitoring a number of interrelated conversations about the complex links between trade and the environment. We have taken note of the joint communication on trade and environmental sustainability in November 2020, and the start of Structured Discussions earlier this year. We will continue to follow these discussions as closely as we are able, and we hope that other Members also recognize their importance.
2.19. Despite these issues, we wish to express our gratitude to the efforts of the Secretariat and also to our bilateral development partners: the Governments of Australia, New Zealand, Japan, and China; the United Nations' Agencies; the Asian Development Bank and the World Bank for their significant assistance with the provision of vaccines for COVID-19 to ensure the safe reopening of our borders to facilitate trade in services and merchandise.
2.20. To conclude, I would like to thank all Members who have already submitted questions during this process, and I hope the preliminary answers we have provided are helpful. Many thanks to Members who are joining us virtually, and I look forward to hearing your reflections on Tonga's trade policy shortly. I would also like to thank the many donors that have provided trade-related technical assistance to the country in recent years. We look forward to many more productive partnerships in the implementation of Tonga's Trade Policy Framework. Finally, I would like to acknowledge Ambassador Falemaka from the Pacific Geneva office, and colleagues who have helped to represent Tonga's interests in Geneva by making statements on behalf of all of us and updating us on developments. As a non-resident Member, we rely heavily on your assistance and we sincerely appreciate it. Thank you very much.
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3 STATEMENT BY THE DISCUSSANT
3.1. It's a true honour for me to be your discussant here today for Tonga's second Trade Policy Review.
3.2. A colleague of mine once said, Geneva is like a big open university, you can learn so much every day, as long as you stay curious and open for new impressions. It's from this perspective I gladly accepted to be your discussant. To selfishly learn more about a country that I until very recently knew very little about. And like at the university – as in our daily work – the more we learn about an issue, the more interesting it gets.
3.3. First of all, I would like to commend Tonga for its Trade Policy Review, but also the WTO Secretariat for its thorough report: 99 pages of policy analysis for a quite small country. These regular analyses are one of the corner pillars of the WTO and should be spread and read way outside Geneva. And I hope you all will help spreading this one too.
3.4. Before I'll comment on the Reports and my impressions, I'll start with some basic observations from me, as a Swede:
3.5. As a kid, I read the Swedish author Astrid Lindgren's story about Pippi Long stocking, and here father was a sailor, "living in the Pacific", no country was mentioned but, in my thoughts, goes to the islands of Tonga.
3.6. For us northerners, with a foot above the Arctic circle accustomed to cold and dark winters, there is some kind of a mystery and magic around pacific islands. Sunshine and high temperatures every day. After this Trade Policy Review, I think I have to go to Tonga and a very good reason to do so.
3.7. Tonga is almost as far from Sweden you can go; it is completely opposite on the globe in the southern hemisphere. But distance apart, I've noticed some similar features :
• Both countries are constitutional monarchies. • Both countries are led by the Prime Minister elected by the unicameral Legislative Assembly, to which elections are held every fourth year. • National Day in Tonga is 4th of June, National Day in Sweden is 6th of June. • And for both countries there seems to be rather complex fiscal systems.
3.8. I will now turn to comment on some aspects of the Review I found interesting, but I'll limit myself to not comment on everything. I'm sorry if there will be some repetition.
Some comments about the Tongan economic environment
3.9. Here in the WTO I often hear references to the challenges of the small island economies. And when we review Tonga this is really something we must bear in mind.
3.10. An archipelago of 176 islands in the middle of the Pacific. It means long distances for transports and imports. The permanent risk of tropical cyclones but also droughts, earthquakes and Tsunamis are factors that we are spared from in Sweden. But this small island nation must face it every year.
3.11. A limited domestic production base underpins the need for import of staples, challenges to food security, as well as for energy production.
Tonga as an international player
3.12. At the same time, Tonga is an international player. I'm very impressed to see how Tonga has been successful in becoming an active member in the international community, a member of the UN from 1999 and a Member of the WTO from 2007. This is a proof of how important international cooperation is for a small island State, and that we, on the other side of the globe pay this country well-deserved attention. The World Bank ranked Tonga on 97th out of 188 economies in their survey "Doing Business" which is impressive for a small island of only 104 000 inhabitants.
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On WTO and on Trade Policy
3.13. As I said, Tonga has been a Member of the WTO since July 2007, so it's a rather "young" Member, still in the teens. Tonga is not part of the ITA, GPA and Trade in Civil Aircraft Agreement, but it is in the process of notification of the TFA-agreement.
3.14. All this cannot be easy to handle for a country without physical representation in Geneva. Tonga follows the WTO from its embassy in London with the assistance of the Pacific Island Forum Secretariat, the ACP Secretariat and the Commonwealth Secretariat to inform about the ongoing discussions in Geneva and I've got the impression you do a very good job to follow it.
3.15. Tonga is maybe a small player but also an active one, with many regional trade agreements: such as PICTA (among Pacific Islands), PACER including Pacific Islands, Australia and New Zeeland, the EPA-agreement with the EU, and GSP schemes with Australia, Canada, the EU, Japan, New Zeeland, Norway, Russia, Switzerland, Turkey and the US.
3.16. Overall, Tonga is a rather open and trade dependent economy.
3.17. Having said that, all countries have their sensitivities and it often relates to what kind of economy we are talking about. Since Tonga is a small island with a limited market, there are restrictions to foreign investments, for example in taxi business, rental cars, cultural sector, security sector, agricultural sector, and some fishing activities. Foreign investors need a certificate for investing in Tonga.
3.18. I note an average applied tariff of 10.4% and a bound tariff of 7.2% at the same time as Tonga grant preferences of 67% of its dutiable tariffs within the PACER Plus agreement.
3.19. I also note that Tonga has no legal and institutional framework for application of anti-dumping, countervailing and safeguard measures. And does not levy any export taxes.
3.20. The biggest goods sector in Tonga is agriculture, making up to 17.7% of GDP employing 22.1% of the work force. Agriculture products also dominates the export making up 54.4% - commodities such as squash, pumpkins, root crops and kava.
3.21. With an Exclusive Economic Zone of 700 000 km2, it's worth noting fishing is one of the country's biggest export sectors. Exports dropped during the review period due to Tropical Cyclone Gita but recovered in 2019 making up 26.6%. But fishing only constitutes 1.9% of GDP.
3.22. Concerning services, I assumed that with a crystal-clear water, sun and warm weather the main services sector would have been tourism. But I've learned that Tonga is a rather high-cost destination and tourism only makes up for 3.3% of GDP, although growing during the review period. Instead leading services sectors are wholesale and retail, real estate activities and public administration. The services sector accounts for 49.2% of the GDP and employs 56.8% of the work force. In light of the importance of the services sector, it is not to a surprise reading that Tonga has made specific commitments in the GATS in 89 out of 160 subsectors, which is quite substantial for a small island.
3.23. As I said previously, Tonga has a quite complicated tax system. Taxes are although outside the realm of WTO trade policy, but I note that there are as well taxes that have a "discriminatory effect", giving domestic producers an advantage. In the report by the Secretariat I see that it is often related to public health concerns, which could be a legitimate cause, but I have problems to understand how a locally produced gin or vodka, less taxed, would help to obtain the goal of better health. In my eyes it looks rather as a disguised support measure for domestic producers.
My observations and recommandations
3.24. On fisheries, I notice legislation in place and a fishery management plan. At the same time, in the Secretariat report fluctuations in the actual catch of tuna exceeds the quote for the same year and the report also says that "Tonga faces challenges in monitoring fishing vessels and enforcing regulations in combatting IUU fishing due to the lack of capacity…". It's not clear to me if Tonga has
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3.25. The second observation is about energy. Tonga is heavily dependent on petroleum imports to feed the electric generators consuming 13 million litres of fuel a year. Diesel generators make up 88% of electric capacity meanwhile solar only counts for 8.3% and wind 3.7%. Although Tonga has the highest levels of access to electricity in the region, I see a big room of structural change going more for renewables such as wind and solar energy, rather than being dependant of imports of more polluting fossil fuel energy.
3.26. My third observation goes to e-commerce and the IT sector. I would have assumed that Tonga had a more developed e-commerce regime and more companies involved in both e-commerce but also other IT related services sectors. If I would guess, this sector will grow in the coming years.
Questions, not to Tonga but to the WTO Secretariat
3.27. My final remark would be addressed to the Secretariat and their thorough work on the Trade Policy report on Tonga which I read with great interest and which will now be one of the main dictionaries on trade and economy for the years to come about Tonga.
3.28. There was one thing that struck me and that I found a little unbalanced if you allow me to say so. In the Report there are limited references to the implications if the COVID crisis. I heard and I read that Tonga has not been affected directly by the COVID, there are no cases on the islands to my knowledge so far. But for me it would have been very interesting to understand the global consequences of the COVID crisis for a small economy as Tonga and a more elaborate discussion on these implications. I'm sure that there are, and in ten years-time, when we look back on the year 2020, I think we all will start with the COVID year so I think that this should be reflected.
3.29. The second issue I miss is a discussion about trade and gender. As we know, half of the world's population are women, but we all know that the conditions for women in trade and in the workforce are often different from those of men. It would have been very interesting to read more about the gender dimension of the economic life and trade in Tonga.
In conclusion
3.30. As I said in my introductory remarks, there are some similarities between Tonga and Sweden. I will end by quoting a few sentences from Tonga's own report to this Trade Policy Review: "Tonga remains firmly committed to the multilateral trading system. Small, open economies such as Tonga are particularly reliant on a system of binding international rules that provide a solid framework for economic development based on the free movement of goods, services, investment and labour. The Government is hopeful that the concerns that various Members have about the future of the WTO can be resolved through consensus-based negotiation that avoids weakening a system that is of such value to all of its Members". These are very wise words that could have, as well, been written in Stockholm for Sweden but I hope all of the Members of this Organization could subscribe to Tonga's commitment to the WTO. I thank you.
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4 STATEMENTS BY MEMBERS
UNITED STATES
4.1. On behalf of the United States, I am pleased to welcome the delegation of Tonga, headed by the Hon. Tatafu Moeaki, Minister for Trade and Economic Development, to Tonga's second WTO Trade Policy Review since its accession in 2007. We thank the Secretariat and the Government of Tonga for their informative reports, and we appreciate the opportunity to gain a clearer sense of the changes and improvements to Tonga's trade and investment policies since its last Review in 2014.
4.2. We commend Tonga for undertaking important reforms to increase transparency in its trade policymaking and legislative process, including Tonga's establishment of a Trade and Economic Development Working Group (TEDWG) in July 2018. The TEDWG brings representatives from the public and private sector, including NGOs and grassroots organizations, into the advisory process for trade and economic development. Further, in 2020, the Legislative Assembly collaborated with the Government to undertake public consultations on pending bills.
4.3. We are pleased to see that Tonga has taken steps forward to fight corruption and improve the country's governance. We commend Tonga on its accession to the 2003 United Nations Convention Against Corruption and the country's commitment to address issues of corruption. We also welcome the creation of a manual on drafting legislation, which provides guidance to officials on how to develop laws and other measures in a clear and consistent manner and supports compliance with international obligations.
4.4. We welcomed the opportunity to submit questions to the Government of Tonga. We thank the delegation of Tonga for its attention to our questions, and we will carefully examine the written responses we have received.
4.5. We would appreciate an update on Tonga's ongoing efforts to implement and ratify the Trade Facilitation Agreement (TFA). In addition, we are interested in getting a better understanding of the status of Tonga's intellectual property protection and enforcement system, including the status of IP-related legislation. We would also like to better understand Tonga's plans to join certain international intellectual property treaties and its customs enforcement efforts, including a requirement that over 20% of shipments undergo physical and documentary checks. The Secretariat report also noted that Tongan customs authorities may suspend clearance of allegedly illegal goods — including counterfeit goods — in accordance with the legislation on the protection of copyright and related rights. As noted in our written questions, we would appreciate Tonga's response to our question as to whether customs authorities have a system in place to identify repeat infringers, and if so, who tracks this information.
4.6. We also note that, in recent years, Tonga has faced a series of tropical cyclones that have negatively impacted the country's economy and projections for economic growth. We further note that Tonga—like many countries here today—is dealing with the economic impact of the COVID-19 pandemic. We encourage Tonga to continue to pursue trade and investment policies that promote economic recovery and equitable growth.
4.7. In closing, we again want to express our appreciation for the opportunity to participate in Tonga's second WTO Trade Policy Review. We are encouraged by Tonga's ongoing commitment to the WTO and its comments that it supports a rules-based multilateral trading system Considering the clear challenges in participating as a WTO Member without a Geneva mission, we remain committed to working with Tonga to implement its WTO obligations, such as its notification requirements with respect to ratifying the WTO Trade Facilitation Agreement this year, and helping it maximize the benefits of its WTO Membership.
4.8. We appreciate Tonga's engagement in this process and look forward to continued work with Tonga and other Members to support the rules-based multilateral trading system.
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EUROPEAN UNION
4.9. I would first like to welcome the delegation of the Kingdom of Tonga, led by the Hon. Mr. Tatafu Moeaki, Minister for Ministry of Trade and Economic Development. I would also like to thank the WTO Secretariat and the Tongan Government for their reports, which form the basis for our discussion today. Let me extend our appreciation to the discussant, H.E. Mr. Mikael Anzén for his comments and introducing us to the country's trade policy review.
4.10. This is Tonga's second Review since its accession to the WTO in 2007, and I would like to start by noting that Tonga is an outstanding example of how beneficial participation in the WTO can be for a small island economy.
4.11. The EU recognizes that Tonga is the smallest Pacific WTO member, whose largely rural communities depend on agriculture and fisheries. Like much of the world, Tonga has faced the economic downturn of the COVID-19 pandemic. Even though Tonga has no confirmed cases, the country has been affected by the suspension of international tourism, which had knock-on effects on the broader economy.
4.12. As noted in the Government and Secretariat reports, Tonga is particularly vulnerable to climate change and prone to natural disasters, such as the devastating Tropical Cyclone Gita in 2018. When discussing trade and environment issues at the WTO, it is evident that Members need to take into account the particular exposure of countries like Tonga to the effects of climate change.
4.13. We welcome Tonga's efforts towards ratifying the Trade Facilitation Agreement (TFA) in 2021, and its participation in the TFA notification process. The EU encourages Tonga to complete its internal legislative process for securing the prompt approval of the TFA.
4.14. The EU commends Tonga for its remarkable effort over the last year to close the gaps in its notification performance. This commitment to transparency shows Tonga's appreciation for international trade rules. We trust that the technical work to prepare the notifications has been beneficial for the Tongan authorities, too, and that they will not hesitate to draw on the Secretariat's resources again in order to keep Tonga's notifications up to date in the future.
4.15. The EU is a steady and major supporter of Tonga's economic development and a key partner in Tonga's integration into the global marketplace. Cognisant of how significant Aid for Trade support is for Tonga to enhance its trade capacity, the EU is one of Tonga's top Aid for Trade donors.
4.16. The EU welcomes Tonga's increasing openness to international trade and supports Tonga's efforts to diversify its economy further. We strongly welcome Tonga's request for accession to the interim Economic Partnership Agreement (EPA) between the EU, Fiji, Papua New Guinea, Samoa, and Solomon Islands, which we hope will provide a long-term platform for our trade relations. The EU stands ready to closely work with Tonga to ensure effective accession to, and implementation of the EPA and to further develop our trade and investment relationship.
4.17. On behalf of the EU, I look forward to a constructive exchange of views and wish the Kingdom of Tonga the best of success during its second Trade Policy Review.
CANADA
4.18. Canada joins others in welcoming Minister Moeaki and the delegation of the Kingdom of Tonga to this second Trade Policy Review of Tonga. Canada is very pleased to be participating in this important discussion.
4.19. Since its previous Trade Policy Review in 2014, and as noted in the Secretariat report, the Government of Tonga has implemented institutional changes despite several challenges, including a series of tropical cyclones. Canada would like to take this opportunity to express its support to the Tongan communities affected by natural disasters and rising sea levels. Canada has been steadfast in its collective commitment with other developed countries to mobilize climate finance through 2025. As part of this commitment, Canada is working to address the critical gap of sustained, in-country technical expertise to support Pacific Island countries like Tonga in securing and structuring finance for priority climate projects.
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4.20. As a small island developing State, Tonga is particularly exposed to natural hazards, which remains a serious risk to its economic development. In addition, the COVID-19 pandemic has heavily impacted Tonga's economy with the most vulnerable persons hit the hardest, including women and girls. In this regard, and despite the numerous challenges faced by Tonga in recent years, we salute the progress and efforts made by the Government of Tonga to support growth and enhance their trade policy framework.
4.21. Canada also applauds Tonga's commitment to the rules-based multilateral trading system with the WTO at its core.
4.22. The Government of Tonga deserves credit for its important tax reform, and improvement of finance management, as noted by the Secretariat. The modernization of the monetary policy and macroeconomic framework are other areas that merit focus. Canada also takes the opportunity to welcome Tonga's accession to the 2003 United Nations Convention Against Corruption.
4.23. Canada commends the Kingdom of Tonga for its work towards ratifying the Trade Facilitation Agreement.
4.24. Canada welcomes Tonga's support of the Buenos Aires Declaration on Women and Trade, and encourages Tonga to consider participating in the Joint Statement Initiatives.
4.25. Canada also encourages Tonga to address its outstanding notifications, and wishes to thank Tonga for its answers to Canada's advance questions.
AUSTRALIA
4.26. Australia is pleased to participate in Tonga's second Trade Policy Review. Australia and Tonga share a strong partnership, established on the longstanding and extensive people-to-people links between our two countries. Our cooperation spans trade, investment, labour mobility, security, development cooperation and sport. In addition to our bilateral engagement, our two countries work closely together at regional and global levels to promote the shared security, resilience, and economic prosperity of the Blue Pacific.
4.27. Our close working relationship has reinforced Tonga's resilience in the face of the global COVID-19 pandemic. Australia congratulates Tonga on its early and ongoing action to remain free of the COVID-19 virus and to provide prompt economic support. Australia and Tonga agreed to restart our labour mobility programs in September 2020, providing a continuing flow of remittances to Tonga and economic benefits for both our countries. We are also pleased to be working closely with the Government of Tonga, the private sector, civil society, and international development partners towards recovery in Tonga, including through Australia's COVID-19 Vaccine Access and Health Security Initiative for the Pacific and Southeast Asia.
4.28. Since the last Trade Policy Review in 2014, and prior to COVID-19, Tonga has faced a number of natural disasters including Tropical Cyclone Gita in 2018, the measles outbreak in 2019, and Tropical Cyclone Harold in 2020, all testing Tonga's ability to respond and recover. Positioned second in the World Risk Index of natural disaster risk, Tonga has made great strides in its economic, trade and governance reform agenda and economic growth, all important for building resilience.
4.29. Tonga also faces socio-economic challenges associated with a high level of non-communicable diseases. Australia is supporting Tonga's concerted efforts to promote consumption of healthy food, while respecting international trade obligations.
4.30. At a domestic level, we welcome Tonga finalizing its second private sector development strategy in 2018 and launching its first trade policy framework (the Tonga Trade Policy Framework/TTPF 2017-2025) in 2020. TTPF's focus on (i) improving the export competitiveness of Tongan businesses, (ii) supporting export development and trade facilitation, (iii) developing trade-supporting institutions and services, and (iv) inclusion and economic empowerment of citizens, aligns well with Tonga's ambitions to participate in the multilateral trading system.
4.31. We note the concluding statement of the IMF Article IV Consultation Mission in 2020 emphasised the need for Tonga to unlock the potential of its private sector. This will help ensure a
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4.32. At the regional level, Australia has appreciated Tonga's membership of the Pacific Agreement on Closer Economic Relations (PACER) Plus FTA. Tonga was a constructive partner during PACER Plus's negotiations. We particularly thank Tonga for its efforts contributing to the timely entry into force of PACER Plus. Tonga has played the essential role of repository for the agreement and has overseen the ratification of eight Parties – including its own ratification in April 2020 as the fifth PACER Plus signatory to ratify the agreement. Tonga's ratification also demonstrated to other members the importance of PACER Plus in supporting the long-term economic recovery from COVID-19 through re-establishing and boosting trade and investment links. With thanks to Tonga's support, PACER Plus entered into force on 13 December 2020. Australia looks forward to our renewed engagement with Tonga as an FTA partner and realizing the benefits of PACER Plus across our Pacific region.
JAPAN
4.33. Let me first extend a warm welcome to this second Trade Policy Review meeting to the distinguished delegation of Tonga headed by H.E. Tatafu Moeaki, Minister for Trade and Economic Development. Japan sincerely appreciates the dedicated efforts made by the Government of Tonga and the WTO Secretariat to prepare the reports that have provided us with important insights for today's Review. We are also grateful to the discussant, H.E. Mr. Mikael Anzén, Ambassador of Sweden, for his insightful remarks.
4.34. Tonga is an important partner for Japan in the Oceania region. In 2020, our two countries celebrated the 50th Anniversary of our establishment of Diplomatic Relations. Japan welcomes the economic growth Tonga achieved during the review period as a result of growth in the construction sector, private consumption, and an accommodative monetary policy stance. We look forward to seeing Tonga recovering from the economic downturn caused by a succession of natural disasters and COVID-19 and achieving further development.
4.35. Japan appreciates Tonga's commitment to the multilateral trading system even though its representation in Geneva might be limited. We welcome Tonga's efforts towards ratifying the Trade Facilitation Agreement in 2021. We believe it is important for Tonga to submit all outstanding notifications together with the necessary information. We encourage Tonga to consider joining the Joint Statement Initiatives. We look forward to Tonga improving its legal and institutional framework for a better trade environment and remaining engaged in multilateral and plurilateral frameworks under the WTO to further strengthen the multilateral trading system
4.36. On investment, Japan welcomes Tonga's efforts during the review period to promote foreign investment by improving the legal framework of its investment regime, acceding to the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards. We look forward to seeing the successful implementation of the new Foreign Investment Act 2020 to attract more foreign investment.
4.37. In conclusion, Japan appreciates Tonga making this TPR meeting possible in spite of the current situation with the pandemic. Japan highly commends Tonga's efforts for the improvement of its trade and investment environment since the previous Review. We wish Tonga a successful and productive TPR.
NEW ZEALAND
4.38. New Zealand welcomes the opportunity to participate in the second Trade Policy Review of Tonga. New Zealand congratulates Tonga on delivering a comprehensive and robust Country Report and looks forward to further discussion of Tonga's trade policy regime over the course of this Review.
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4.39. Geographically, Tonga is New Zealand's nearest neighbour. Our shared Polynesian heritage means our relationship is one of whanaunga/kin-to-kin. Today, 82,000 Tongans call New Zealand home. Economically, our two nations are interlinked, with New Zealand being Tonga's largest trading partner and the majority of Tonga's remittances flowing from communities in New Zealand.
4.40. This Review of Tonga's trade policy takes place at a time when Tonga and the rest of the globe is combatting and looking to recover from the COVID-19 pandemic. While Tonga's border restrictions have significantly impacted its economy, as is true across the WTO Membership, we congratulate Tonga on being one of the few countries to remain COVID-19 free.
4.41. Since its last Trade Policy Review in 2014, Tonga has also unfortunately been impacted by a number of tropical cyclones, most notably cyclones Gita in 2018 and Harold in 2020, as well as a significant outbreak of measles in late 2019.
4.42. Internationally, New Zealand and Tonga work together closely in a range of bilateral and multilateral settings, sharing similar perspectives on many issues, including on the benefits of international trade and the importance of collective climate change action.
4.43. New Zealand commends Tonga for its leadership as depositary of the PACER Plus Agreement. We recognize the significant preparatory work of signatories' senior officials to date, which culminated in the Agreement entering into force in December 2020. We acknowledge that implementing the Agreement is a challenging process for Tonga, and for the other Pacific Parties. New Zealand encourages Tonga to continue to prioritize PACER Plus implementation as this will maximize Tonga's ability to benefit both from the Agreement and the WTO agreements it is party to. These efforts will help further integrate Tonga into the global economy.
4.44. New Zealand congratulates Tonga on its efforts to reduce dependency on fossil fuels. We welcome Tonga's insights on its experience with its targeted fuel subsidy.
4.45. New Zealand notes Tonga's high rates of non-communicable diseases (NCD) and commends Tonga for its effort to tackle these. We would be interested to know whether the trade policy approach Tonga has taken as part of these efforts is delivering improved health outcomes, and what plans the Government of Tonga has to further address Tonga's NCD challenges.
4.46. New Zealand recognizes the significant contribution Tongans make to New Zealand's Recognized Seasonal Employer Scheme. New Zealand is interested in the development of Tonga's Labour Mobility Policy Framework and how the global pandemic has impacted implementation.
4.47. New Zealand has also raised questions in this Review with regards to the development of Tonga's tourism sector. New Zealand invites Tonga to elaborate on its Tourism Crisis Response and Recovery Plan.
4.48. In conclusion, New Zealand commends the steps taken by Tonga since the 2014 Review to maximize trade benefits and, over the past year, to manage the impacts of the pandemic; and particularly recognizes the challenges it faces as a developing economy at this time.
4.49. We wish Tonga a successful Trade Policy Review experience and we look forward to Tonga's perspective on the issues that will be raised during the course of this Review.
CHINA
4.50. China would like to warmly welcome the delegation of Tonga headed by H.E. Tatafu Moeaki to this second Trade Policy Review. We would also like to thank the WTO Secretariat and the Government of Tonga for their reports and the discussant, H.E. Mr. Anzén for his insightful remarks.
4.51. China would like to commend Tonga's better economic performance with average real GDP growth of 2.35% annually from 2013 to 2019, compared with 1.27% over the previous review period. We are also pleased to see Tonga has established a trade policy framework and improved its investment regime framework during the period under review, to support its sustainable development.
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4.52. Turning to trade policy, Tonga's commitment to the multilateral trading system is welcome. We take note that Tonga has not yet ratified the Trade Facilitation Agreement (TFA), but already participated in its notification process. We encourage Tonga to step up its efforts to implement the TFA as soon as possible. We also welcome Tonga's continuous interest and participation in fishery subsidies negotiation.
4.53. The trade between our two countries maintained steady growth in the past few years. According to our statistics, the bilateral trade reached a value of USD 34 million in total in 2020, up 14% compared to 2019. On investment, China is the major foreign direct investor to Tonga, and our FDI amounted to USD 10 million in total in 2020. We would like to take this opportunity to encourage Tonga to further improve its investment regimes to attract more FDI to support its economic and social development. In addition, we carried out sound cooperation with Tonga in the framework of China-Pacific Island Countries Economic Development and Cooperation Forum in various sectors, such as agriculture, infrastructure, renewable energy, and look forward to enhancing our cooperation in this framework.
4.54. In conclusion, China appreciates Tonga making this TPR meeting possible in spite of the current pandemic situation. For the purpose of this Review, China has submitted questions to the Tonga and looks forward to early responses from Tonga.
4.55. Finally, we wish this Trade Policy Review a great success.
BRAZIL
4.56. Let me start by welcoming the delegation of the Kingdom of Tonga, headed by Minister Moeaki. I would also like to thank the discussant, Ambassador Anzén, and you, Chair, for your respective statements. Let me also congratulate the Secretariat for the thorough and efficient preparation of Tonga's second Trade Policy Review.
4.57. Brazil is pleased to participate in the second Trade Policy Review of Tonga. In the first Review, in 2014, Brazil mentioned that trade plays a central role in the process of economic and social development of every country. We are happy to hear that Tonga not only agrees, but has also highlighted, in its report, that the multilateral trade rules provide the framework needed to promote economic development based on open markets.
4.58. The accession of Tonga to the WTO in 2007 was a milestone in Tonga's integration process to the global economy. Since the first Trade Policy Review, progress has been made, bilateral trade figures continue to grow, despite the consequences of the coronavirus pandemic, which had significant effects over trade flows in 2020. If we look further back, we are pleased to note that trade between Brazil and Tonga has increased considerably since 2007, even though the distance – and the logistical difficulties – are considerable.
4.59. Brazil considers, however, that there is still room for improvement. We believe that bilateral trade is still well below its potential and could be further expanded, both in terms of value and of diversification. We trust that partnership between our countries will continue to develop and we will be able to close this gap in the near future.
4.60. I would like to conclude by reiterating that Brazil stands ready to further enhance its cooperation and trade with Tonga. We wish the Kingdom of Tonga a successful Trade Policy Review.
SINGAPORE
4.61. Let me start by extending a very warm welcome to the Honourable Mr Tatafu Moeaki, Minister for Trade and Economic Development and the Tongan1 delegation participating virtually from Nuku'alofa. We thank Tonga for its Government report and statement. We also thank you, the TPRB Chair, Ambassador Athaliah Molokomme, the Secretariat, and the discussant, Ambassador Mikael Anzén of Sweden, for their insightful reports and statements.
1 Tonga joined the WTO in 2007.
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4.62. At the outset, Singapore commends Tonga for conducting this TPR via a “hybrid” format despite the difficulties posed by the COVID-19 pandemic and the impact of natural disasters. It reflects Tonga's commitment to the WTO and the Trade Policy Review process. The monitoring function is a critical pillar of the WTO, and the conduct of this “hybrid” TPR signals the Organization's continued resilience. Allow me to now make three points.
4.63. First, Singapore and Tonga enjoy longstanding and warm relations as fellow small island States. Singapore remains Tonga's second largest source of imports from 2014 to 2019, with refined petroleum products representing the bulk of the imports. In 2020, bilateral trade between Singapore and Tonga amounted to USD 2.4 million but there is room for growth and for both sides to expand bilateral cooperation. One such area is increased cooperation in the tourism sector. With Tonga's abundance of marine parks and reserves, there is potential to promote sustainable tourism which can showcase Tonga's rich biodiversity. As small island states, Singapore and Tonga can also share our development experiences with each other. Under the Singapore Cooperation Programme (SCP), more than 150 Tongan officials have received training in various areas such as urban development, management of waste and reduction of marine litter. The MOU signed by Tonga's former Prime Minister Lord Tu'ivakano2 in 2014 to provide partial scholarships to Senior Tongan Government Officials for MBA courses and fellowships at the Nanyang Business School illustrates the importance of collaboration to develop human resources to support economic development. We look forward to growing bilateral cooperation and identifying new areas of cooperation.
4.64. Second, Singapore commends Tonga's continued efforts to deepen regional economic integration. We applaud Tonga's efforts in establishing a robust trade policy framework and negotiating regional market access arrangements, as exemplified by the Pacific Agreement on Closer Economic Relations Plus (PACER Plus) which just came into force in December 2020. This will be Tonga's most economically significant regional free-trade agreement to date. Tonga's positive experience in trade and tariff liberalisation with the PACER Plus will facilitate its accession to and implementation of other RTAs, such as the Pacific Island Countries Trade Agreement (PICTA), and another possible future agreement with Australia and New Zealand. We are confident that these developments will help Tonga further integrate into global supply chains as it climbs the economic ladder.
4.65. Third, on the multilateral front, we welcome Tonga's continued commitment to the WTO. Despite the absence of a Permanent Representative in Geneva3, Tonga has made sustained efforts to make its voice heard. Most recently, Tonga was one of the co-sponsors of the Joint Statement on Export Prohibitions or Restrictions Relating to the World Food Programme, which was issued in January 2021. We also note that under its Trade Policy Framework (TTPF), Tonga is keen to improve its trade policy in the area of e-commerce and has developed a National E-commerce Readiness Assessment (NERA) to support its efforts. In this regard, we strongly encourage Tonga to join the Joint Statement Initiative (JSI) on E-Commerce discussions, which will enable Tonga to embrace E-Commerce to deliver the most benefits for MSMEs and women entrepreneurs by reducing costs and expanding markets. We also encourage Tonga to continue its efforts to ratify the Trade Facilitation Agreement (TFA) this year.
4.66. In conclusion, Singapore looks forward to deepening bilateral engagement with Tonga, and look forward to enhancing collaboration at the WTO. We wish Tonga every success for its second TPR.
THE SEPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU, KINMEN AND MATSU
4.67. On behalf of my delegation, I would first like to extend a very warm welcome to the delegation of Tonga, led by the Honourable Tatafu Moeaki, Minister of Trade and Economic Development. I would also like to express our sincere thanks to the discussant, His Excellency, Ambassador Mikael Anzén (Sweden) for his very constructive analysis and in-depth observations.
2 Lord Tu'ivakano paid an official visit to Singapore in April 2014 and met with PM Lee Hsien Loong and then-Minister for Environment and Water Resources Grace Fu. He lost the Tongan general election in November 2014 and subsequently became the Speaker of the Tongan Parliament. 3 Tonga is represented in WTO matters by the Permanent Delegation of the Pacific Islands Forum (PIF) in Geneva, and by Tonga's High Commission in London.
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4.68. We share similar experiences with Tonga in encountering and overcoming the challenges posed by regular tropical cyclones. Notwithstanding the difficulties, we commend the Government of Tonga still strives for a recognizable economic performance and has made substantial economic progress since its first TPR in 2014. The creation of the Tonga Trade Policy Framework (TTPF) and its ratification of the Pacific Agreement on Closer Economic Relations Plus (PACER Plus) are both noteworthy examples.
4.69. We also commend Tonga on its success in carrying out the Tonga Labour Mobility Policy Framework with a view to optimizing the business environment for outgoing Tongan workers. With the levels of participation by women in overseas employment schemes still remaining generally low, we are keen to learn more about how the economic participation by Tonga's women will develop in the future.
4.70. On the bilateral front, in 2019 our two Governments signed the Memorandums of Understanding on cooperation in the exchange of financial intelligence relating to money-laundering, associated predicate offences, the financing of terrorism, as well as on the prevention of proliferation of weapons of mass destruction. We hope that such cooperation could serve as the basis to enhance our bilateral cooperative activities in many other fields.
4.71. On the bilateral trade and economic relations, our economies are of different but mutually supplementary nature. We believe that there is potential for a lot more exchanges and expansion. In addition, we would also like to identify possible aspects of cooperation under the framework of the WTO Aid for Trade scheme, and in other fields covered by the WTO.
4.72. May I conclude by wishing the Tonga delegation a most successful and fruitful Trade Policy Review.
INDIA
4.73. My delegation is pleased to participate in the second Trade Policy Review of Tonga. On behalf of India, I would like to welcome the delegation of Tonga led by H.E. Tatafu Moeaki, Minister of MTED and his team for the TPR. We thank H.E. the Minister for his comprehensive opening statement, Ambassador H.E. Mr. Mikael Anzén of Sweden, for his insightful observations as a discussant, and the Secretariat and the Government of Tonga for the reports prepared for the Review.
4.74. We are happy note from the Secretariat's report that since the last Trade Policy Review of Tonga in 2014, Tonga's economy has grown at a strong pace. We also note the challenges confronted by Tonga due to the frequent natural disasters, mainly the tropical cyclones and commend the resilience of people of Tonga amidst these adversities. We welcome the reforms undertaken by Tonga for modernizing the economy and the steps taken to better integrate with the global trading system. We also commend Tonga's commitment to the multilateral trading system and welcome the steps being taken by Tonga to ratify the Trade Facilitation Agreement in 2021, as well their efforts to comply with the notifications obligations at the WTO.
4.75. India and Tonga share warm and friendly bilateral relations. Tonga is an important partner for India at the Forum for India-Pacific Islands Cooperation (FIPIC) and the International Solar Alliance (ISA). We deeply appreciate the support by Tonga for India in various multilateral forums. India is an important development partner of Tonga and is undertaking development cooperation activities in Tonga through bilateral channels as well as through the India-UN Development Partnership Fund. India has also provided HADR assistance to Tonga, most recently during the aftermath of Tropical Cyclone Gita in 2018.
4.76. We appreciate and recognize Tonga's concerns on the need for a development-oriented multilateral trading system that protects the interest of Small Island Developing States (SIDS) and the need for building a disaster resilient trading system. India would continue to support initiatives aimed at supporting SIDS, both here at the WTO and other multilateral fora. In the same manner, India remains committed to expanding and deepening our bilateral cooperation with Tonga in the years ahead.
4.77. I wish our friends from Tonga a productive and successful TPR.
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JAMAICA ON BEHALF OF THE ACP GROUP
4.78. At the outset, we wish to extend a warm welcome to the Honourable Tatufa Moeaki, Minister of Trade and Economic Development and the members of his delegation to this meeting. We thank Tonga, as well as the Secretariat for the very comprehensive and informative reports provided, which form the basis of our deliberations today. In addition, we wish to express our appreciation to you, Chair, as well as to the discussant, Ambassador Mikael Anzén of Sweden for your respective comments and analysis in relation to this important exercise.
4.79. Since its last Trade Policy Review in 2014, the Kingdom of Tonga has undertaken significant reforms at the institutional level to promote trade and foster development. The ACP Group wishes to commend the country in particular on the Tonga Trade Policy Framework launched in August 2020 and which is currently being implemented. The pillars of this framework identify critically important dimensions of trade policy such as the promotion of industrial and investment development and strengthening trade facilitation.
4.80. As an archipelago in the Pacific, trade is vital for the country and the WTO is an essential vehicle in helping Tonga meet its economic growth and development objectives. Trade is also vital to support recovery from climatic disasters and the recent COVID-19 pandemic. Indeed, the tourism sector accounts for around 20% of the country's GDP and the second highest source of foreign exchange earnings.
4.81. In fact, prior to the outbreak of the COVID-19 pandemic, the trend in the tourism sector of Tonga was on a strong upward trajectory with travel receipts having grown by 14.2% between 2014 and 2019. Following the outbreak of the pandemic, the Government closed the borders brings tourism to a standstill. Despite this significant challenge, the Group would like to applaud the Government of Tonga for taking constructive steps to lay the foundations for a strong recovery through training programs to improve the skills of tourism workers and enhancing the sanitary standards in tourism sites. Such efforts and steps should be recognized by the WTO Membership, especially countries that are major consumers of tourism.
4.82. The geographic situation of Tonga underlines the importance of digital trade to overcome barriers such as high transportation costs. The COVID-19 pandemic further amplified the importance of digital trade to maintain linkages with trading partners amidst the generalized lockdowns. Acknowledging the significance of digital trade, the Kingdom of Tonga developed a National E-commerce Readiness Assessment and a Digital Government Strategic Framework during the period of review with a view to promote ambitious goals such as rendering access to mobile and wireless connection universal by 2024.
4.83. In parallel, we must also salute the effort by the Kingdom of Tonga to embark on a bold path to modernize its customs clearances. Tonga has demonstrated commitment and resolve to implement the Trade Facilitation Agreement in adopting an implementation roadmap. This roadmap integrates a performance and monitoring mechanism to see through full implementation of the agreement. In addition, Tonga carried out in 2020 a time release study under the aegis of the World Customs Organization in order to better undertake necessary reforms.
4.84. A concrete step to support these efforts is the digitization of the customs process in adopting the ASYCUDA World system. This step will deliver significant benefits in reducing red tape in customs clearance. Another tangible measure envisage by Tonga is the implementation of x-ray scanning capability at the main port that will contribute to speeding up customs clearance.
4.85. An additional action, in line with simplifying customs clearance, is the implementation of the “Authorised Economic Operators” programme in coordination with the ministries of agriculture and fish that will ease inspections. We must also note that Tonga is in the process of setting up the Tonga Trade portal, a platform that will create transparency in terms of import and export conditions.
4.86. We would like to highlight the resilience of the Kingdom of Tonga, as a small vulnerable economy, in the face of the significant climatic challenges, including Tropical Storm Gita which caused considerable devastation to the country in 2018. Studies and indicators by the IMF and World Bank remind us that Tonga is among the most vulnerable countries in the world due to its exposure to cyclones and other types of extreme climatic events.
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4.87. Not only does this impact the Government revenue owing to the significant costs for reconstruction in the aftermath of an event, but this also disrupts production activities and trade. Tonga's case is by far not an isolated case since many other ACP countries are also vulnerable due to natural disasters – Saint Vincent and The Grenadines a painful case in point.
4.88. Thus, we urge WTO Members to identify concrete measures that can support countries such as Tonga in building greater economic and trade resilience in the face of climatic challenges.
4.89. Finally, we would like to commend Tonga for the progress achieved in ushering impactful reforms such as modernizing customs clearances and we wish Tonga every success in carrying through those reforms.
VANUATU ON BEHALF OF THE PACIFIC GROUP
4.90. I make this statement on behalf of the Pacific Group and wish to thank Members for their interventions and questions in this second Trade Policy Review of Tonga.
4.91. Our Group commends Tonga for the presentation of its national trade policy at this Review and we have taken note of the responses made today by the Honourable Tatafu Moeaki, Minister for Trade and Economic Development of the Kingdom of Tonga.
4.92. As fellow Pacific Group members, we wish to congratulate Tonga again for the new Trade Policy Framework 2020 and support the ongoing reforms to improve Tonga's trade capacity and better integrate Tonga into the multilateral trading system as well as the regional trade arrangements. We welcome Tonga's participation in regional initiatives such as the quality infrastructure initiative and regional e-commerce initiative that aim to strengthen our trade capacity and competitiveness. As Members that share common interests and similar challenges, we also look forward to working closely with Tonga in the WTO to ensure that WTO rules and facilities are able to assist us address our trade challenges and support our development efforts.
4.93. We note the commitment by Tonga to progress the WTO Trade Facilitation Agreement at national level and we support the efforts.
4.94. The Pacific Group also reiterates our call for WTO Members and partners to assist Tonga in the implementation of its new Trade Policy Framework and other trade reforms to enable Tonga to increase its participation in the global trading system.
4.95. We acknowledge Tonga as a valued member of the Pacific WTO Group and express our assurance that we will work together to ensure a successful WTO Ministerial Conference (MC12) this year. And assure Tonga that we will continue to actively work with Tonga to conclude a meaningful fisheries subsidies agreement by the end of 2021.
4.96. In closing, I wish to congratulate Tonga for a successful Trade Policy Review and thank the Government of Australia and other partners for its support to this exercise. We also acknowledge the input facilitation by the Pacific Islands Forum Secretariat in this exercise.
MAURITIUS
4.97. The Mauritius delegation warmly welcome the high-level delegation of Tonga led by the Honorouble Tatafu Moeaki, Minister of Trade and Economic Development. We thank the Minister for the presentation on the state of Tonga's economic and trade policies. The Mauritius delegation also thanks the discussant, His Excellency Ambassador Anzén, for his insights, as well as the WTO Secretariat for their comprehensive report.
4.98. Mauritius is pleased to participate in this Trade Policy Review and commend Tonga for its second Trade Policy Review after the first one was successfully undertaken in 2014.
4.99. We are appreciative of Tonga's strong commitment to the multilateral trading system and the upholding of its WTO commitments coupled with the efforts being undertaken towards ratifying the Trade Facilitation Agreement this current year.
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4.100. Tonga being a Small Island Developing States, like Mauritius, whilst implementing its national economic development policies, has had to cope with the disastrous effects of a series of tropical cyclones in the recent years. We have in mind particularly the cyclone Gita, which caused serious damages to Tonga, affecting up to a third of Tonga's GDP in year 2018.
4.101. This downfall in growth perspectives, is now being compounded with the challenges being created by the COVID Pandemic.
4.102. We are aware that Small Island Developing States have lesser reserves, resources, and capacities to achieving meaningful resilience to cope with the magnitude of the consequences that these current situations, of frequent natural calamities and the COVID Pandemic are creating.
4.103. Mauritius is pleased that the 2019 Voluntary National Review (VNR) of SDG planning and progress, for Tonga and helped to align the Tonga Strategic Development Framework (TSDF II) 2015–25 with the SDGs and also with the SIDS Accelerated Modalities of Action (SAMOA) Pathway 2014.
4.104. Mauritius also commends the launch in August 2020 of the Tonga Trade Policy Framework (TTPF), the country's first comprehensive trade strategy, and we look forward toward its implementation which is beginning.
4.105. It is in this perspective of continuing to adopt a participative approach in the multilateral trading system and continuous engagement in opening of the economy that we value Tonga's endeavours both as a SIDS and as a OACP state.
4.106. Whilst agriculture and fisheries exports, especially fresh fish, continue to contribute significantly in the export earnings of the country, Tonga remains an NFIDC and thus highlights our common appurtenance on those issues at the WTO.
4.107. Through the Permanent Delegation of the Pacific Islands Forum we are aware of Tonga's involvement in the build up to the MC12. In this regard, we welcome Tonga's position in the negotiations on fisheries subsidies. Mauritius and Tonga believe that reducing the total quantity of subsidies is paramount for sustainable stocks and for levelling the playing field for more participation of small island states.
4.108. Small islands and developing countries should be allowed the necessary flexibilities for artisanal fishing, that basic support to local fishermen not be burdened by complicated notification and stock assessment requirements.
4.109. Importantly, Mauritius together with Tonga reiterate that SIDS should be provided with adequate and effective S&D provisions to enable them to support the development of the fisheries sector and we are agreeable to the need for appropriate measures to ensure the sustainable development of the fisheries sector. We will work together so that the developmental aspect is not be relegated in the negotiations and that special and differential treatment are imbedded in any agreement.
4.110. In addition to fisheries, we take good note of the involvement of Tonga, through the Delegation of the Pacific Islands Forum in the Joint Statement Initiatives (JSIs) particularly on e-commerce and micro, small and medium enterprises (MSMEs).
4.111. We would also like to highlight Tonga's support regarding the joint statement on agriculture export prohibitions or restrictions relating to the World Food Programme.
4.112. Mauritius is also happy to be with Tonga to be constructive engaging with other Members to explore all current concerns and possible solutions relating to reform of the WTO.
4.113. To conclude, Mauritius wishes a successful Review to the delegation of Tonga.
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REPUBLIC OF KOREA
4.114. I would like to join other speakers in welcoming His Excellency, Tatafu Moeaki, Minister of Trade and Economic Development and his delegation to the Second Trade Policy Review of the Kingdom of Tonga. I also thank Ambassador Anzén for his role as discussant and the Secretariat for its very comprehensive report.
4.115. For a country that is as dependent on tourism and the service sector as Tonga, it goes without saying that the economic fallout of the COVID-19 pandemic has been severe. What is all the more disheartening is that in the case of Tonga, the pandemic came against the backdrop of a succession of devastating tropical cyclones. Indeed, the pre-COVID challenges that Tonga faced as a small island developing state have been put into stark relief by the fact that the ratio of its climate-related losses to GDP is among the highest in the world.
4.116. Notwithstanding these tremendous challenges, Tonga has shown sturdy resilience and my delegation commends its continued commitment to the multilateral trading system. We welcome, in particular, its efforts to further integrate itself regionally through ratification of PACER Plus in 2020 and to ratify the WTO Trade Facilitation Agreement this year. The latter will surely help facilitate trade with a country like Korea, which is Tonga's top 5 merchandise export destination. Korea is pleased to play a modest part in supporting Tonga's customs administration modernization. We also welcome its accession to the UN Convention Against Corruption. The enhanced transparency and accountability will unquestionably bring lasting benefits to its economy as a whole.
4.117. The Korean delegation is fully cognizant of the limited resources that Tonga could bring to bear in Geneva. We note that Tonga is already keenly engaged in the fisheries subsidies negotiations and is following the JSIs on E-commerce and MSMEs. We would nonetheless encourage Tonga to consider looking at some other ongoing Structured Discussions which would redound to the interests of Small Island Developing States as well. Indeed, we are pleased to hear Minister Moeaki making careful note of the recently launched Trade and Environmental Sustainability Structured Discussions, which does have particular relevance for countries with unique climate-related vulnerabilities. In addition, a number of Small Island Developing States including those which, like Tonga, have very limited investment agreement networks, have also been seeing value in the potential investment facilitation agreement being discussed by more than 100 WTO Members. Indeed, investment facilitation aligns well with a strategic concept outlined in the Tonga Strategic Development Framework (TSDF) 2015-2025: that is, seeking to provide clear and transparent rules, regulations, incentives, and information that encourage both foreign and domestic investment.
4.118. Thank you and we wish the Kingdom of Tonga a successful second TPR.
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5 REPLIES BY THE REPRESENTATIVE OF TONGA AND ADDITIONAL COMMENTS
5.1. Thank you, Madam Chair, for your excellent management of our sessions. And we also wish to extend our thanks to you Ambassador Mikael Anzén, as discussant to the Review. I appreciate the interest Members have shared in the challenges that Tonga encounters, the opportunities for Tonga and the constructive feedback we have received regarding ways that trade policy, and engagement with the WTO can be of assistance.
5.2. You have all received our written responses to the questions posed. I will briefly comment on common themes and respond to some specific issues raised during the first meeting on Wednesday.
5.3. First, we welcome the encouragement received from many delegations to prioritize the ratification and the implementation of the Trade Facilitation Agreement. I can confirm that we remain on track to completing ratification of the TFA in 2021, as noted in the Secretariat report, and we very much look forward to presenting our instrument of acceptance to the WTO.
5.4. Second, whilst Tonga remains COVID-19 free to date, the impact on businesses reported by ILO independent survey has been substantial. At least 50% of the surveyed businesses were affected, 35% partially affected and 15% had been forced to close and not operating. Those that remained open saw activity plunge as demand lower than normal, and cash flow to maintain staff and operations inadequate. The border close and restrictions to air cargo trade and shipping delays are not helpful. The direct effects on our tourism industry are very clear which saw a starkly 87% decline in visitors' arrivals, affecting our tourist operators significantly including the supply chains.
5.5. Tonga's GDP is estimated to fall by around 3% in FY2020 and contract at a higher rate of over 6% in FY2021. The critical assumption to determine the extent of the recession is around the depth and timing of the border remaining closed in Tonga because of the COVID-19 pandemic.
5.6. For an important export sector such as fresh fish experienced a drastic decline in exports of 84%, which relies on a complex, high-dependency supply chain, has also been adversely affected due to many restrictions in export markets. This is an area in which our partners can play an important role, not just with financial and technical support to keep firms afloat, but by advocating for the needs of our exporters within their own government systems, so that emergency trade barriers reduces the harm inflicted than strictly necessary to international suppliers.
5.7. The Government of Tonga launched a USD 60 million stimulus package since June 2020 which provided some assistance over the last 10 months whilst at the same time, the Government is proposing a budget the 1st of July 2021, a recovery plan for a time when the border re-opens.
5.8. We appreciate the comments regarding the importance of mobilizing climate finance, and the view that sustained, in-country technical expertise is a crucial requirement for securing and structuring finance for climate projects. The Government has prepared since 2020, following an IMF Climate Change Policy Assessment, a Climate Disaster Resilient development strategy and investment plan based on assessments pertaining to hazard, exposure, vulnerability and risk. The outcome will better inform Government's Infrastructure Investment Planning and financing during the course of 2021, and that will require planning for the long-term, tail risks and transformational responses reflecting the scale of the risks to Tonga.
5.9. We note a number of comments and questions relating to the labour mobility schemes that Tonga highlighted in our Government report. The launch of a Labour Mobility Policy Framework is an important step to reflect on the long-term initiatives that we need to implement to gain the greatest benefit from these schemes and to reduce their risks — but it is also true that the global pandemic has temporarily shortened our planning horizon. We agree that the early reopening of labour mobility schemes has been very helpful to soften the economic damage resulting from the pandemic and we welcome the initiatives for example, Australia has continued chartering selected flights to ensure continuation of our workers' access to Australia. We look forward to bringing the same strategy to our tourism sector, and we will continue to work closely with our most important tourism markets to get to the point where we can welcome international visitors under controlled circumstances as soon as it is safe to do so.
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5.10. We recognize questions posed by Members on gender imbalance as it relates to our participation in existing labour mobility schemes. Gender parity is yet to be achieved in the low-skill or semi-skilled sectors that are supplied through labour mobility schemes.
5.11. Progress towards gender equality and equity is guided by the National Women's Empowerment and Gender Equality Tonga Policy 2019, with each Ministry responsible for progressing gender equality in their sector. There are implementation constraints, including lack of data and strong evidence base to guide policy interventions, lack of knowledge about gender relations across government, limited resources, and limited implementation capacity. The social and economic impact of COVID-19 containment since March 2020 is likely to negatively impact progress against these frameworks.
5.12. Despite the unequal participation rates, the Government has supported women to be better involved in trade, this includes construction of a hall for a women association (membership of 100+) involved in making of tapa cloth to readily trade with overseas diaspora which generates an average of 10,000 pa'anga in income and women community projects to engage in the growing of high value niche vegetables and floriculture for export.
5.13. In my recent statement, I highlighted Tonga's struggle with non-communicable diseases, and our efforts to use trade policy as part of a range of tools to address this. I took note of some Members' curiosity regarding the outcome of these measures. I would like to acknowledge the World Bank scientific approach (supported by Australia, New Zealand and Japan), which has provided us with sufficient evidence base for policy decisions. The World Bank study concluded that our success in using trade policy to encourage consumers to switch to healthier food has been mixed. Our policy has been successful in reducing consumption of some targeted foods, including turkey tails and mutton flaps to name a few.
5.14. At the same time, there has been difficulty in ensuring cheap and healthy alternatives are available. A tax exemption on imported fruits failed to lead to a fall in price, so traders benefited rather than consumers. Fresh fish is a desirable and healthy source of protein but remains more expensive than imported meats that are higher in salt and fat, and it remains out of the reach of low-income households. In general, healthy foods remain expensive and hard to obtain. This reinforces our view that trade policy will form part of the solution but must be used alongside other measures. The nutrient profile model report has been approved by the Government of Tonga which is scientific based to review existing excise policies on food.
5.15. The Government is now finalizing the Foreign Investment Regulations based on the Foreign Investment Act 2020. The main contention focusses on the Government's intention to reduce both restricted and reserved activities exclusively for Tonga in order to contribute to national goals to increase domestic production, access to foreign capital and technology.
5.16. E-commerce opportunities build on increased access, availability, and affordability that the Government has achieved significant progress, and currently addressing the required infrastructure that allows sellers to transact businesses with buyers. The Government can build on the increasing social acceptance and awareness of the capacity of our access to affordable high-speed broadband provides.
5.17. Our IP, WIPO and related commercial laws including the manner enforceable agreements are structured, rights are protected as raised to some extent, are not yet appreciated by the local Government because they are more a problem for foreign investors. Our lack of understanding and familiarity of how important they are for business, to be sound and safeguarded thus the importance of this Trade Policy Review by the WTO so that we are on track when we are not.
5.18. I would like to thank the Members that acknowledged the constraints faced by small island developing States, including the challenges that we face in actively participating in the WTO agenda and our distinct technical assistance requirements relating to a wide range of trade issues. It is encouraging to hear that other Members have shown sensitivity to these issues in the process of negotiating a fisheries subsidies agreement, and I very much hope that this continues.
5.19. The Tonga customs assessment methodology is based on a matrix of risk indicators. Other risk indicators that may be applied in addition to the import's and custom's broker's characteristics,
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- 24 - prior record and consignment's nature and origin include the Country of Export details; Supplier prior record; Shipment document number details; Mode of transportation; and Discrepancies in information supplied with import/export declarations. Apart from these specific indicators, the automated system may also be set to randomly select consignments for either documentary or physical checks.
5.20. I was interested by the encouragement that a number of Members have offered for Tonga to follow particular joint statement initiatives more closely, particularly those relating to E-Commerce, Investment Facilitation for Development, and Trade and the Environment. The reasons put forward that these initiatives have a lot to offer to Tonga are compelling, and we would certainly be more involved in all three if it was not for our resource constraints. If we are not able to participate actively in their negotiations, then we will certainly examine the outputs that they yield and give careful consideration to whether they would benefit Tonga.
5.21. In conclusion, I would like to extend again our thanks to the Members for their questions, comments and attention during this Review, and may I again thank Your Excellency for your able leadership through this process, and also Ambassador Anzén for his role and, more importantly, his obvious links to Tonga. I thank the thoughtful comments and the staff of the Secretariat for the hard work that has made this Review possible. I thank you.
DISCUSSANT
5.22. As I said in my introductory remarks, I've learned a lot about Tonga during this second Trade Policy Review and I very much appreciated the broad engagement by many Members.
5.23. It also struck me that most of the comments and questions raised, have been more or less around the same themes and issues.
5.24. First of all – although or maybe because of, Tonga being a small island economy – it is a rather open and trade dependent country.
5.25. One question we all should ask is how a small island of only 104 000 inhabitants, in the middle of the Pacific, can beat many other, much bigger and more influential countries, in the World Bank "Doing Business" index? Tonga 103rd of 190 economies in their 2020 survey.
5.26. My reading is two-fold: that this small island is doing a lot of things right, but also that there are some room for improvements. I think this Trade Policy Review could help policy makers to move up this ladder if they are committed to do so.
5.27. We heard Minister Moeaki very articulated describing many of the challenges Tonga, and I would say many other small island States, encounter. I think that other countries do help islands States to recover after a Tropical Cyclone that has passed. But I've also learned from other UN agencies in this town, that one thing is the acute help after a catastrophe – another thing is the long-term restructuring after disasters. When we talk about long term, I think the international trading system and the WTO have an important and concrete role to play.
5.28. Minister Moeaki also highlighted challenges to improve the growth potential. As with other countries relying substantially on labour mobility and international remittances, I see somewhat a conflict of interest between getting the remittances, but also the need of keeping skilled people in Tonga to stimulate innovations and help creating a domestic labour market.
5.29. Minister Moeaki also referred to the fibre optic submarine cable that was installed in 2013 and increased the accessibility and lowered the price for internet services. At the same time, the Secretariat reports that "business and household deployment of optical fibre has so far been limited", and as I noted in my remarks in the first day: "I would have assumed that Tonga had a more developed e-commerce regime and more companies involved in both e-commerce but also other it related services sectors". If you allow me to, one more time, compare to my home country Sweden, where I see substantial growth and trade in the IT sector. So, if I were to develop something in Tonga, I see a big potential here and we also heard about important initiatives such as the National E-commerce Readiness Assessment, as well as the Digital Strategic Framework.
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5.30. Concerning tourism services, I noted some differences in the size and importance of this sector between the Minister's intervention and the Secretariat report. Nevertheless, we can all agree that during countries lockdowns and travel restrictions, tourism was almost depleted. Now we must all help in rebuilding a sustainable tourism, contributing to islands like Tonga's economic recovery. In my preparations for my next trip to Tonga I checked up 10 things to know about before I go there, and one advice which I also could add to the recommendations is that "Credit cards won't get you far", you need cash. In 2021, I believe credit cards or e-payments must be available almost anywhere.
5.31. The Minister also highlighted the importance of the fishing sector as the country's biggest exports and welcomed a meaningful result of the fish subsidies negotiation for their own development. This is an important message to all of us from a country so dependent on this sector.
5.32. Minister Moeaki acknowledged Tonga's vulnerability to climate change, which the Tropical Storms are a first-hand indicator of. Comments and recommendations from other Members were to encourage Tonga to engage in the Structural Discussions on Trade and Environmental Sustainability. But I also heard recommendations to engage in many of the Joint Statement Initiatives, such as e-commerce, investment facilitation and MSMES. As a gender champion myself, I'm glad to note that Tonga already participates in the Informal Working Group on Trade and Gender as the second phase of the initiative, the Joint Declaration on Trade and Women's Economic Empowerment, that was launched at the Ministerial Conference in Buenos Aires in 2017.
Comments from Members
5.33. If I would pick up two issues that Members raised in their questions and interventions, it was: first, the need for Tonga to implement the TFA-agreement. As one Member commented and that the Secretariat also highlighted in their report, one fifth of all imports are subject to physical checks, which in my ears sounds like a very large proportion with the risk of delays and burdensome customs procedures as a consequence.
5.34. The second issue I noted was an interest to learn more about the long term or the global consequences for Tonga of the COVID crisis. We are still in the crisis but the next to come is how a small island like Tonga will build back and how to do it sustainable.
5.35. A final remark from my side is that searching for more information and relations between Tonga and Sweden, I found the Instagram account with Tonga Ski team, where Kasete-Naufahu Skeen, been practicing in the Swedish mountains to participate in the World Cup in Åre in 2019. As Sweden will arrange the WTO Ski Race in 2022, I hope to see Tonga and Kasete there as a VIP guest.
5.36. Chair, I thank you very much and wish Tonga much of luck for their Trade Policy Review.
NEW ZEALAND
5.37. I just wanted to quickly thank Minister Moeaki and his team from Nuku'alofa for their dedication and commitment to this Review, not only in the meetings but also in the preparation and conduct of the documentation, and I hope, as Minister Moeaki said, this will be of great assistance to Tonga as they move forward with further implementation of policy in the areas that he identified.
5.38. I, too, was noticing the sacrifice that the Minister and his team were making, it looked like close on 10 pm on Friday night if the clock on the wall was correct. And the only other thing I would say is, to Ambassador Anzén, I would be very cautious before stepping on the rugby field with Tonga. They are formidable opposition.
VANUATU ON BEHALF OF THE PACIFIC GROUP
5.39. I wish to thank Members for their interventions and questions in the second Trade Policy Review for Tonga.
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5.40. The Pacific Group commends Tonga for the presentation of its national trade policy review, and we have taken note of the responses made today by the Hon. Moeaki, Minister for Trade and Economic Development of Tonga.
5.41. As fellow Pacific Group members, we wish to congratulate Tonga again for its Trade Policy Framework 2020 and support the ongoing reforms to improve Tonga's trade capacity and better integrate Tonga into the multilateral trading system, as well as the recent trade arrangements.
5.42. We welcome Tonga's participation in recent initiatives such as the Quality Infrastructure Initiative and the Regional E-Commerce Initiative that aims to strengthen our trade capacity and competitiveness.
5.43. As Members that share common interests and similar challenges, we also look forward to working closely with Tonga in the WTO to ensure that WTO rules and facilities are able to assist us address our trade challenges and support our development efforts.
5.44. We note the commitment by Tonga to progress the WTO Trade Facilitation Agreement at national level, and we support the efforts.
5.45. The Pacific Group also reiterates our call for WTO Members and partners to assist Tonga in the implementation of its new Trade Policy Framework and other trade reforms to enable Tonga to increase its participation in the global trading system.
5.46. We acknowledge Tonga as a valued Member of the Pacific WTO Group, and express our assurance that we will work together to ensure a successful WTO Ministerial Conference MC12 this year. And we welcome Tonga's active participation in the fisheries negotiations which we hope we can conclude a meaningful agreement by the end of the year.
5.47. In closing, I wish to congratulate Tonga for a successful Trade Policy Review. I thank our different partners such as Australia and New Zealand for the support and I also wish to acknowledge the assurance from the Secretariat to assist in the exercise to support Tonga.
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6 CONCLUDING REMARKS BY THE CHAIRPERSON
6.1. Despite the COVID-19-related constraints, the second Trade Policy Review of Tonga has offered us a good opportunity to deepen our understanding of recent developments in, and challenges to, its trade, economic, and investment policies. Since its first TPR in 2014, Tonga's initiatives to maintain its participation in the multilateral trading system and take advantage of the opportunities it offers have been greatly appreciated. Indeed, the 84 advance written questions submitted by 8 Members and the 15 delegations that took the floor during the first and second day underline the importance attached by Members to Tonga's trade and investment policies and practices.
6.2. I would also like to thank Tonga's delegation, led by the Hon. Tatafu Moeaki Minister for Trade and Economic Development, for its active participation in this exercise. Also, I would like to thank our discussant H.E. Ambassador Mikael Anzén, Permanent Representative of Sweden to the WTO, for his insightful remarks, and all the delegations that took the floor for their valuable contributions to this Review.
6.3. Members acknowledged Tonga's position among the most vulnerable countries in the world due to its exposure to natural hazards and the effects of climate change. Indeed, natural disasters, such as Tropical Cyclone Gita in 2018, the measles outbreak in 2019, and Tropical Cyclone Harold in 2020, remain a serious economic development risk and recurrently test Tonga's ability to respond and recover. Tonga also continues to face socio-economic challenges associated with a high level of non-communicable diseases. Tonga's progress and efforts to support economic growth during the review period were generally praised.
6.4. Members also commended Tonga's COVID-19-free status but noted that the pandemic-induced economic downturn was inevitable amid generalized lockdowns and the suspension of international tourism, which had knock-on effects on the broader economy.
6.5. Members praised Tonga's tax reform, improvement of finance management, the modernization of the monetary policy and macroeconomic framework as well as its private sector development strategy and the establishment of its first trade policy framework. Furthermore, they commended its efforts to improve the investment climate and policy initiatives such as the Tonga Labour Mobility Policy Framework, the National E-commerce Readiness Assessment and a Digital Government Strategic Framework, as well as institutional reforms to promote trade and foster development.
6.6. Tonga was commended for the steps taken to increase transparency in its trade policymaking and legislative process as well as to improve governance including its accession to the 2003 United Nations Convention Against Corruption. Members encouraged Tonga to pursue trade and investment policies that promote economic recovery and equitable growth.
6.7. Members praised Tonga's commitment to a rules-based multilateral trading system despite the lack of a Permanent Representation in Geneva. They recognized Tonga's interest in a more disaster resilient and development-oriented multilateral trading system that protects Small Island Developing States' (SIDS) interests. While welcoming Tonga's work in implementing its WTO obligations that would help maximize the benefits of WTO Membership, Members encouraged Tonga to promptly complete its internal legislative process for ratification of the WTO Trade Facilitation Agreement (TFA) and to address its outstanding notifications. They welcomed Tonga's continuous interest in the fishery subsidies negotiations and highlighted the benefits of also engaging in the ongoing negotiations on investment facilitation.
6.8. While Tonga's support of the Buenos Aires Declaration on Women and Trade and its role as a co-sponsor of the Joint Statement on Export Prohibitions or Restrictions Relating to the World Food Programme were praised, Members encouraged it to consider participating in other Joint Statement Initiatives (JSI) discussions, notably on E-Commerce. Members commended Tonga's continued efforts to deepen regional economic integration, in particular its leadership role as depositary of, and prompt ratification of the Pacific Agreement on Closer Economic Relations (PACER) Plus FTA, that would help further integrate Tonga into the global economy.
6.9. Tonga's initiatives to modernize and accelerate its customs clearance procedures were praised. Information on customs enforcement efforts and plans to join certain international intellectual property treaties was sought. Tonga was encouraged to ensure that the agricultural and fisheries
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- 28 - sectors had high quality infrastructure and accompanying policies. Tonga was congratulated on its efforts to reduce dependency on fossil fuels. Information on the Tourism Crisis Response and Recovery Plan was requested.
6.10. The above points are some of the key issues that had emerged in our discussion. I hope that the Tongan delegation will consider and further reflect on these issues and on the many constructive comments, both broad and detailed, that it has received during this Review. Members look forward to receiving the answers from Tonga to any outstanding questions within one month, at which point the Review will be successfully concluded.
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