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Government of Samoa Government of Samoa Diagnostic Trade Integration Study Volume I & II December 2010 i Map of Samoa Source: www.lib.utexas_edu/maps/samoa.html ii Foreword The Samoa Diagnostic Trade Integration Study (DTIS) was/is a timely exercise as the economy has been faced with challenges over the years with the persistent and increasing trade deficit. Several attempts by the Government have been made to address the issues that continue to affect the contribution of trade to Samoa’s economy. Some of these include the National Trade Policy Statement 2008 and the National Export Strategy 2008‐2012. The DTIS consolidates work that has been done to date to integrate trade into the national planning process and improve exports through the improvement of institutional frameworks. The DTIS Report was prepared under the auspices of the UN Integrated Framework for Trade‐ Related Technical Assistance. The preparation of the Report began in January 2008 when a mission by IF representatives from UNCTAD, WTO, and UNDP Trade & Human Development Unit in Geneva visited Apia to inform the Government of Samoa about the Enhanced IF for Trade Guidelines. A Cabinet directive F.K.07(41) established a national steering committee in 2007 with its main function being the oversight of the IF project, and to provide policy guidance and oversight to the implementation of the Action Matrix. A national sensitization workshop lead by the IF Focal Point (MFAT) and the IF Mission was held to inform all stakeholders of the aim, objective and expected outcomes of the IF project. Work on the conduct of the Study commenced in May 2009 following the engagement by UNDP of KVAConsult Ltd as the Team Leader, and the inaugural meeting of the IF Steering Committee in May 2009. A National Validation Workshop concluded phase 2 of the IF project with the endorsement of this report by the key stakeholders involved in its formulation. The Report is in two Volumes. These are (i) Volume I: the executive summary and action matrix and (ii) Volume II: the main report. The main objective of the DTIS report is to identify key constraints, both internal and external, to Samoa’s trade development and to make recommendations on actions, in terms of legislation and policy framework changes, institutional reforms, capacity development and training, trade negotiations, to address these constraints and to mainstream trade development into Samoa’s strategic planning frameworks. The report also examines how linkages between trade policies and social issues such as gender balance and poverty alleviation could be strengthened and mainstreamed in line with Samoa’s progress toward achieving Millennium Development Goals in these important areas. The report and its recommendations is Samoa’s national integrated trade policy and will provide a key tool in the formulation of the planned sector wide approach to trade. While the DTIS report identifies constraints to trade development and recommends actions to address these challenges, the sector plan should ensure future predictability and coordination of donor funding for trade development and to link these to the national funding mechanisms to implement the target outcomes of the integrated policy. The sector approach will also reinforce the importance of putting in place the legislative and institutional framework to implement and monitor trade policy. The Ministry of Foreign Affairs and Trade provides oversight of the implementation of the integrated policy as well as guidance on Samoa’s international engagement to advance its objectives. I commend this Report to all our stakeholders, including our trade and development partners. Tuilaepa Lupesoliai Sailele Malielegaoi PRIME MINISTER And MINISTER OF FOREIGN AFFAIRS AND TRADE i Table of Contents Map of Samoa ............................................................................................................................................... ii Foreword ........................................................................................................................................................ i List of Tables ................................................................................................................................................ vi List of Figures ............................................................................................................................................... vi List of Boxes ................................................................................................................................................ vii List of Acronyms ......................................................................................................................................... viii VOLUME I ....................................................................................................................................................xiii Executive Summary ..................................................................................................................................... xiv Action Matrix ............................................................................................................................................ xxvi VOLUME II .................................................................................................................................................. xliv SECTION I: OVERALL TRADE ISSUES .............................................................................................................. 1 1 Chapter 1: Macroeconomic Analysis .................................................................................................... 1 1.1. Introduction ...................................................................................................................................... 1 1.2. Background ....................................................................................................................................... 1 1.3. Composition of the Economy ............................................................................................................ 3 1.3.1. Structural Changes in Productive Capacity ................................................................................... 3 1.3.2. Employment Structure .................................................................................................................. 5 1.4. Recent Economic Developments ...................................................................................................... 6 1.4.1. General .......................................................................................................................................... 6 1.4.2. Prices and Wages Developments .................................................................................................. 8 1.4.3. Fiscal Developments ...................................................................................................................... 8 1.4.4. Monetary Developments ............................................................................................................. 10 1.4.5. Investment Flows Developments ................................................................................................ 10 1.4.6. External Developments ............................................................................................................... 10 1.5. Macroeconomic Policy Environment .............................................................................................. 11 1.5.1. Institutional Policy Framework ................................................................................................... 11 1.5.2. Fiscal Policy ................................................................................................................................. 11 1.5.3. Monetary and External Account Policies .................................................................................... 14 1.6. Progress towards Poverty Reduction .............................................................................................. 17 Conclusions ................................................................................................................................................. 21 Recommendations ...................................................................................................................................... 22 2 Chapter 2: Trade Development Framework ....................................................................................... 23 2.1 Introduction .................................................................................................................................... 23 2.2 Trade Performance ......................................................................................................................... 23 2.2.1 Import Performance .................................................................................................................... 25 2.2.2 Export Performance .................................................................................................................... 27 2.3 Trade Regime .................................................................................................................................. 31 2.3.1 Import Policy Measures ............................................................................................................... 32 2.3.2 Export Policy Measures ............................................................................................................... 36 2.5 Existing
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