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WT/TPR/W/122
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Trade Policy Review Body
SOLOMON ISLANDS
DRAFT MINUTES OF THE MEETING* HELD ON 13 AND 15 DECEMBER 2016
Delegations are invited to submit factual corrections, if any, on their own statement to the Secretariat (Mrs Barbara Blanquart: [email protected], or to [email protected]) no later than 27 January 2017.
Organe d'examen des politiques commerciales
ÎLES SALOMON
PROJET DE COMPTE RENDU DE LA RÉUNION* TENUE LES 13 ET 15 DÉCEMBRE 2016
Les délégations sont invitées à soumettre leurs éventuelles corrections factuelles concernant leurs propres déclarations au Secrétariat (Mme Barbara Blanquart: [email protected], ou [email protected]) le 27 janvier 2017 au plus tard.
Órgano de Examen de las Políticas Comerciales
ISLAS SALOMÓN
PROYECTO DE ACTA DE LA REUNIÓN* CELEBRADA LOS DÍAS 13 Y 15 DE DICIEMBRE DE 2016
Las delegaciones pueden enviar a la Secretaría (Sra. Barbara Blanquart: [email protected], o [email protected]) a más tardar el 27 de enero de 2017 las correcciones fácticas que deseen introducir en sus propias declaraciones.
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* In Original language only/En langue originale seulement/En el idioma original solamente.
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TRADE POLICY REVIEW
SOLOMON ISLANDS
DRAFT MINUTES OF THE MEETING
Chairperson: Ms Irene Young (Hong Kong, China)
CONTENTS
1 INTRODUCTORY REMARKS BY THE CHAIRPERSON ...... 3 2 OPENING STATEMENT BY THE REPRESENTATIVE OF SOLOMON ISLANDS ...... 5 3 STATEMENT BY THE DISCUSSANT ...... 10 4 STATEMENTS BY MEMBERS ...... 14 5 REPLIES BY THE REPRESENTATIVE OF SOLOMON ISLANDS AND ADDITIONAL COMMENTS ...... 29 6 CONCLUDING REMARKS BY THE CHAIRPERSON ...... 36
Note: Advance written questions and additional questions by WTO Members, and the replies provided by Solomon Islands are reproduced in document WT/TPR/M/349/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 third Trade Policy Review of Solomon Islands was held on 13 and 15 December 2016. The Chairperson, Ms. Irene Young (Hong Kong, China), welcomed the delegation of Solomon Islands headed by the Honourable Mr. Milner TOZAKA, Minister of Foreign Affairs and External Trade; the delegation from Solomon Islands; and the discussant, Mrs. Dalia KADIŠIENĖ (Lithuania).
1.2. The Chairperson recalled the purpose of the Trade Policy Reviews and the main elements of the procedures for the meeting. The report by Solomon Islands was contained in document WT/TPR/G/349 and that of the WTO Secretariat in WT/TPR/S/349.
1.3. Questions by the following delegations had been submitted in writing before the deadline: Australia; European Union; Canada; Chinese Taipei; and the United States. The following delegations submitted written questions after the deadline: New Zealand and Thailand.
1.4. At the previous TPR meeting in May 2009, Members had recognized the various challenges facing Solomon Islands, had expressed their support for its ongoing reform efforts, and had urged it to accelerate the pace of macroeconomic and structural reforms, in order to achieve fiscal sustainability, diversify its economy, and improve living standards. Members were pleased to note that during this review period, Solomon Islands had indeed taken steps to strengthen its public financial management framework, its taxation system, and monetary policy framework. Now there was also a National Development Strategy setting out the country's economic policy in the next 20 years, and remarkably it contained Solomon Island's first formal trade policy framework. The Chairperson saw this as a positive response to Members' comment at the last TPR that the country needed to strengthen its institutional capacity, especially for trade policy formulation and implementation.
1.5. Solomon Islands had a relatively open investment regime, thanks to the liberalization efforts which Members had commended at the last TPR. This time, Members continued to express a strong interest in this area, asking questions about foreign investors' participation in various sectors and the discriminatory treatment they faced. These were issues that the country would need to address if it was to boost its relatively low and declining FDI inflows.
1.6. Back in 2009, Members had commended Solomon Islands' customs reform. It was encouraging to see that continued efforts had been made to further improve the customs procedures, in particular through the adoption of new legislation giving effect to the WTO Customs Valuation Agreement. Members looked forward to receiving Solomon Islands' notification on the relevant rules.
1.7. In this connection, Members might recall having encouraged Solomon Islands to make regular notifications to the WTO. As could be seen from Members' advance written questions, the absence of these notifications remained a concern. Members were expecting the authorities to step up compliance in this regard.
1.8. Another issue that had been outstanding since the last TPR was about tariffs and charges. It was commendable that Solomon Islands had bound its entire tariff schedule and had reduced its tariffs unilaterally. However, it was also noted in the last TPR that some applied tariff rates had exceeded corresponding bound rates and certain internal taxes had been applied in a discriminatory manner. It seemed that improvements had yet to be made – hence the many advance written questions posed by Members this time.
1.9. Focusing on specific trade sectors, Members had noted at the last TPR Solomon Islands' commitment to reforming its forestry legislation. This was of paramount importance because forestry was a major source of revenue, and supported the livelihood of many people in the Solomon Islands. As Members had pointed out last time, there was an urgent need for the country to strengthen natural resource governance, where harvesting rates were well above sustainable levels. This was also the subject of some advance questions this time. It was useful to know what concrete measures the Government had taken to address this issue.
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1.10. In their questions, Members also showed interest in other areas of trade policy, such as import licensing procedures, technical regulations and standards, sanitary and phytosanitary measures, state trading, government procurement, competition policy and intellectual property. In terms of trading sectors, questions were also asked about agriculture, fisheries, energy and mining, and transport.
1.11. This meeting was a good opportunity for Members to discuss in greater detail these issues, as well as other issues of interest to Members and of systemic importance to the multilateral trading system. The Chairperson looked forward to a fruitful exchange.
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2 OPENING STATEMENT BY THE REPRESENTATIVE OF SOLOMON ISLANDS (HON. MR. MILNER TOZAKA)
2.1. It is with great honor that I stand before this room today to present the opening statement of the third Solomon Islands' Trade Policy Review, on behalf of the Government of Solomon Islands. For a country such as ours, which operates on the margins of the global trading system, this exercise gives us the opportunity to show the world the progress we have made to implement policy measures that will not only boost our trading capacity, but also enhance our economic growth prospects.
2.2. We recognize this process as an important activity to promote transparency in our Government processes, and safeguard the effective functioning of the multilateral trading system. Solomon Islands' remains deeply committed to opening up our trading regime for evaluation and scrutiny in order to promote and encourage further reforms that will strengthen our obligations under the WTO.
2.3. Allow me to recognize the outstanding commitment and effort shown on the part of the WTO Secretariat, and my own Government, to ensure the full completion of this review. The report that you see before you meets our expectations in terms of comprehensiveness and quality, and I would like to express my sincerest gratitude to all those who participated in the process to produce a study of such high standard.
2.4. Since the last Trade Policy Review in 2009, the Government of Solomon Islands has continued to pursue policies and reforms aimed at improving the economic and social livelihoods of our people, to reduce poverty and promote sustained and inclusive economic growth. Reforms to increase investment opportunities, to encourage greater participation of the private sector, and reinvigorate productive and resource sectors are just some of the efforts underway to achieve these commendable ambitions.
2.5. Given that the majority of the population lives in rural areas, our Government is not only focusing on the main productive areas in and around Honiara, the capital city of Solomon Islands, but also concentrating on expanding employment and labor mobility opportunities for the rural population, to promote income generation, maintain urban stability and reduce the risk of a return to the conditions that led to the period of ethnic unrest 16 years ago.
2.6. Positively, Solomon Islands' economy has shown signs of stability and improvement since the last review. Despite a sharp fall in GDP growth during the Global Financial Crash in 2008, growth rates have rebounded and since 2013, have been stable, at around 2.9%. Forecasts for 2016 predict continued stability. Total merchandise trade, despite experiencing a fall over the review period, stood at around 70% in 2015, orientated predominantly towards Asia.
2.7. In addition, Solomon Islands recorded a fiscal surplus for most of the review period, however slid into deficit in 2015 due predominantly to expansions in government funded activities in rural infrastructure and social services.
2.8. As spending on major infrastructure projects is set to continue in the coming years, the deficit is expected to widen, but the resulting impact on employment and opportunities for income development should provide a much needed boost to the economy.
2.9. Notwithstanding the progress mentioned, we must not forget that to successfully reduce poverty and improve livelihoods for all Solomon Islanders, achieving much faster growth to that recorded so far is crucial, a point well understood by my Government.
2.10. At this juncture, it would be pertinent of me to emphasize that like most LDCs, particularly small island developing States, the Solomon Islands faces many challenges including costly service provision, geographic isolation and dispersion, and vulnerability to economic shocks and natural disasters. As a result, our economic performance can be greatly impacted by factors beyond our control. For these reasons, it is imperative that we safeguard against manipulation of those measures that are in our control to ensure the efficient management of our economy, to not only encourage resilience, but show strength in the face of adversity.
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2.11. In spite of these challenges, we are making progress. Notably, legislation governing the Central Bank has markedly improved transparency and accountability in monetary policy decisions; exchange rate adjustments have induced greater certainty; and furthermore, revisions to the debt management framework have prompted a steady downward trend in outstanding government debt.
2.12. In its continued commitment, the Government of Solomon Islands has carried out major tax reforms since 2009, improving revenue collection and compliance, as well as increasing transparency in the provision of exemptions, in the hope of reducing the distortionary effects on the economy.
2.13. I would also like to highlight a law, introduced in 2014, to manage public finances, aimed at improving the management of public resources through greater accountability, improved monitoring and reporting and enhanced procurement rules. These serious reform efforts signal the Government's dedication to instilling confidence in the economy.
2.14. But, there is still much to be done to establish a tax system that truly promotes economic activity and induces confidence. Tax reform is a priority of this Government and we will continue to endeavor towards addressing the requirements.
2.15. The development agenda of Solomon Islands is set out in the National Development Strategy. Initially launched in 2011 with a ten year time horizon, it was expanded earlier this year to map out the future direction of the Solomon Islands' economy over the next twenty years. This shift signals the Government's intention to implement policies that will have long lasting benefits, rather than focusing on short term wins.
2.16. The NDS is harnessed within five thematic objectives: sustainable economic growth, poverty alleviation, access to quality healthcare and education, environmentally sustainable development with a focus on disaster risk management, and a unified nation encompassing stable and effective governance.
2.17. Specifically for trade, over the course of the review period, the Solomon Islands' Government has adopted two trade policy documents, the Enhanced Integrated Framework Diagnostic Trade Integration Study 2009 and the Solomon Islands' Trade Policy Framework 2015.
2.18. The DTIS offers a coherent approach to trade and trade related policy formulation. It interlinks national activities and identifies trade related assistance requirements with the aim of mainstreaming trade policy into the broader process of government planning.
2.19. The TPF complements the DTIS, identifying specific policy measures and strategies which seek to enhance the international competitiveness of the economy and ensure the effective participation of Solomon Islands in international trade.
2.20. The support shown for these policy documents underscores the Government's understanding of and commitment to using trade as a means to alleviate poverty and generate economic growth.
2.21. I would like to go on to highlight further achievements that have been made by the Solomon Islands since the last trade policy review.
2.22. Firstly, given the myriad of challenges we face, as a geographically isolated country far from major trading markets, making the exchange of goods easier and simpler is intrinsic to the successful integration of Solomon Islands into the world economy.
2.23. We fully support recent initiatives to enhance the facilitation of trade, particularly the WTO's Trade Facilitation Agreement. The provisions of special and differential treatment for developing countries and LDCs incorporated into the Agreement, as well as the technical assistance and capacity building support on offer, should enable us to put in place the structures necessary for compliance.
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2.24. Earlier this year, we notified the WTO of our Category A Schedule of Commitments and intend to notify Categories B and C in due course. Once internal processes are complete, the instrument of acceptance will be deposited with the WTO.
2.25. I am also at liberty to report that Solomon Islands has already started implementing provisions of the Agreement. In November 2015, the National Trade Facilitation Committee was set up, responsible for implementing the Agreement and maintaining dialogue between the Government and private sector. In addition, as of 2015, Solomon Islands is using ASYCUDA World for the effective collection and dissemination of customs data.
2.26. Recognizing the importance of dialogue, the Government of Solomon Islands during this review period set up the National Trade Development Council, a cross-government, private sector and civil society body responsible for mainstreaming trade into the wider national agenda. Through effective communication of trade policies to relevant stakeholders, the Council aims to promote the benefits of an open, liberal trading regime for the economy as a whole.
2.27. The Council, chaired by myself, is the only all-encompassing body dedicated to advancing the trade agenda in the country and offers a platform for discussion at the highest level.
2.28. I wish to now mention some of the key sectors in the Solomon Islands economy, and highlight the main achievements over the review period.
2.29. The fisheries industry represents one of Solomon Islands' most important sectors, as a source of employment, government revenue and crucially, the opportunity it creates for value addition activities. Total catch over the review period has been increasing, although the amount processed in Solomon Islands is not enough to meet our development needs.
2.30. The Government is working hard to encourage investment, to expand our capacity to process, not only to export raw produce. The Government is also working extremely hard to combat illegal, unregulated and unreported fishing in Solomon Islands, and with the support of the EU and New Zealand, we should be able to formally lift the yellow card handed down by the EU in 2014 in due course.
2.31. The efforts our Government has made to ensure compliance show our commitment to the fisheries sector and the recognition of its importance to the economy, particularly I must mention, for women who account for the majority of employees in this sector.
2.32. Tourism is recognized globally as a major driver of growth, but Solomon Islands to date has yet to capitalize on the opportunities. However, the recent approval by cabinet of the Solomon Islands National Tourism Policy signals our intention to expand activities in the sector. The proposals aim to reverse the low levels of investment seen in recent years, expand human resource capacity and improve infrastructure.
2.33. Underscoring our commitment, we have as part of our delegation, Director of Tourism, Mr Barney Sivoro from the Ministry of Culture and Tourism, as well as information and marketing on tourism in the Solomon Islands. We strongly encourage you all to take a glimpse at the unparalleled beauty and off the beaten path experiences that you will find vacationing in Solomon Islands.
2.34. Although the majority of the population resides in rural areas, the services sector of the Solomon Islands accounts for the largest share of total GDP.
2.35. The Government recognizes the importance of services to enhance sustainable economic growth. Despite the persistent trade in services deficit, the Government operates a liberal investment regime with few restrictions in terms of sectors for foreign investors to enter and operate. Legislation covering the services sector is currently under review with a view to enhancing consumer protection.
2.36. I must also take this opportunity to highlight some of the reforms carried out in the business sector, which I hope will address the concerns raised by our recent low ranking in the World Bank Ease of Doing Business Index.
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2.37. In 2010, the Companies Act was updated and an electronic registry installed, which have significantly reduced the cost and time taken to register a business, from fifteen days to less than two. What's more, the cost fell from approximately SI$2,000 to SI$150 or from approximately US$250 to US$20. It is noteworthy that in the period following reform, the rate of company registrations tripled.
2.38. In addition, I am very pleased to announce here today that the Solomon Islands Business Registry website was launched on 22 November 2016. The business registry is an electronic register available to the public providing a range of information about companies, business names and foreign investment to help users decide how they wish to do business in Solomon Islands. The quick and easy to use registration service means registering a business in Solomon Islands has never been simpler. With this tool at our disposal, we hope Solomon Islands will be the number one investment destination in the Pacific. For more information on business registration and foreign investment in Solomon Islands, please speak with our delegate, the Director of Invest Solomons, Mr Derick Aihari.
2.39. Additional progress underway in competition policy formulation should go further to ensure Solomon Islands promotes a conducive environment in which to start and operate a business.
2.40. In recognition of the importance of the telecommunications and transport sectors, a number of reforms have been enacted over the course of the review period. In telecommunications, the reforms in 2009 opened up the sector to competition, improving reliability, lowering costs and increasing employment.
2.41. In the transport sector, policies aimed at supporting the local contracting industry have led to expansions in employment opportunities, particularly for women.
2.42. We firmly believe, as evidenced in the publication of a strategy for the economic empowerment of women and girls, that tapping into the productive potential of women is fundamental to enhancing the trade performance of Solomon Islands.
2.43. I cannot stress to the room enough how important a cohesive pacific region, which promotes shared values, economic and social opportunities, is for Solomon Islands. We, pacific islands, are small and isolated, which makes our cooperation all the more important to put us firmly on the map of global trade.
2.44. Despite the fact that our economies have been trading with each other for millennia, our main trading partners lie further afield. It is the ambition of the Solomon Islands, through the MSG trade agreements and PICTA, to increase the amount of goods traded across the region, to keep the benefits of trade at home.
2.45. Solomon Islands is continuing to strengthen relations with key trading partners outside the forum island countries, with the imminent conclusion of PACER Plus negotiations. This trade agreement should lead to benefits from development cooperation and expanded labour mobility initiatives.
2.46. Solomon Islands continues to believe that concluding a development friendly Economic Partnership Agreement with the EU is in the interest of the pacific region.
2.47. Solomon Islands has made extensive efforts to implement economy wide and trade specific reforms over the review period. We recognize that there is still some way to go, but we believe the stage has been set for more investment, expanded trading opportunities and, ultimately, economic growth. The Government of Solomon Islands will continue these reforms, to push for a favorable environment for trade and investment.
2.48. Finally, I wish to briefly mention Solomon Islands' engagement in the multilateral trading system.
2.49. Since the WTO Agreement entered into force in 1995, LDCs have faced considerable challenges implementing the agreement, Solomon Islands being no exception.
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2.50. In recognition of these difficulties, subsequent Ministerial Declarations sought to address the marginalization many LDCs face when attempting to participate in the multilateral trading regime.
2.51. Nevertheless, Solomon Islands continues to lack the necessary financial, institutional and technical capacities to comply. Therefore, we must use this opportunity to call, once more, for a renewed commitment for technical cooperation and capacity building support to be adequately provided for in the WTO's regular budget, as well as by fellow WTO Members.
2.52. It would be remiss of me not to make reference to the Enhanced Integrated Framework and the efforts made towards tackling the supply side constraints we face in Solomon Islands. I strongly encourage the WTO and our development partners to continue and expand the support for this facility, particularly as we transition into the second phase of the programme.
2.53. I would also like to take this opportunity to thank all those development partners that pledged their support for EIF during the donor pledging conference, which took place in the margins of MC10 in Nairobi last year. May I now encourage further coordination efforts to facilitate our greater participation in the multilateral trading system.
2.54. In conclusion, I would like to, once again, stress the important steps that Solomon Islands has taken since the last Trade Policy Review to enhance trade, harness the subsequent benefits and fulfil our commitments under the WTO agreements.
2.55. Our limited financial and human resource base and lack of adequate institutional capacity has slowed the pace at which we are able to adopt necessary legislations, constraints complying with SPS rules, and limited productive capacity are further major obstacles to Solomon Islands' integration into the multilateral trading system. But these will not deter us.
2.56. It is of the utmost importance here today that I take the opportunity to express our need for external technical assistance and help to build our internal capacity. To overcome the constraints Solomon Islands faces, we need your support.
2.57. Finally, I would like to reiterate Solomon Islands continued commitment to the multilateral trading regime. As an LDC, we understand the importance of creating an inclusive and rules based system that encourages distant nations such as ourselves to enter and trade unencumbered. Solomon Islands will strive to ensure that the system is strengthened for the benefit of all WTO Members.
2.58. I wish to extend my appreciation and gratitude for your support to Solomon Islands and thank you for your attention.
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3 STATEMENT BY THE DISCUSSANT
3.1. Let me first take the opportunity to welcome the delegation of Solomon Islands led by Mr. Milner Tozaka, Minister of Foreign Affairs and External Trade, to the third Trade Policy Review of this country. I also wish to thank the Government of Solomon Islands and the Secretariat for preparing very useful and informative reports that provide a good basis for an in-depth discussion on economic situation and challenges faced by Solomon Islands and country's trade policies seeking to address them.
3.2. I extend my sincere thanks to the Chairperson for her insightful opening remarks that inspire us for a productive discussion, which, I am confident, will ensure useful and effective trade policy review of Solomon Islands.
3.3. As the discussant, representing also very small and highly trade dependent country, I would like to underline the importance of right trade and economic policies in ensuring economic growth and sustainable development. While focusing on several aspects of trade and macroeconomic policies of Solomon Islands, I would also like to highlight challenges faced by this country and the efforts made by the Government since the last trade policy review in 2009.
Economic environment
3.4. Before starting to speak about the economic environment, I would like to underline the particular geographic situation of Solomon Islands – consisting of over 900 islands located in the Pacific Ocean, the country is heavily exposed to natural disasters and to the impacts of climate change. Since the last TPR, Solomon Islands faced several of them: heavy flooding, cyclones, El Nino and earthquakes (as you know, the earthquake has struck Solomon Islands just few days ago). While experiencing periodic damages to infrastructure, negative impact on fish catch and agricultural production, macroeconomic stability remains an ongoing challenge. Against this backdrop, it is worth to note that macroeconomic fundamentals of Solomon Islands remain quite sound - debt levels stand at just 8% of GDP, enabling Solomon Islands to borrow for emerging opportunities for productive investment. However, the Government ended 2015 with a fiscal deficit (contrary to 2014) and it would appear that the fiscal balance will deteriorate further as the Government engaged in major capital expenditures in 2016, and donor assistance is on a declining trend.
3.5. Being dependent on few natural resources such as logging and fish, Solomon Islands' economy is very vulnerable, in particular to commodity price declines. Thus, diversification of the production of goods and services as well as addressing supply-side constraints are the objectives laid down in the National Development Strategy 2016-2035 - very important strategic document also incorporating the Trade Policy Framework in it.
3.6. Yet, I would like to acknowledge important achievements of the country bringing it close to the threshold of graduation from the LDC status. Economic growth has ranged between 2 to 10% since 2010 in particular thanks to the growing logging and construction activities, tuna processing, and retail services. Nevertheless, the economic growth of 2–3% recorded in recent years is too low to sustain an improvement in living standards (with a population growth of 2.5% per annum). Moreover, economic growth is projected to average only 3 to 4% over the medium term.
3.7. I would like to draw your attention that during the period since the last review, the Government of Solomon Islands took several important steps that helped to support economic development. Moving from a US dollar peg to a peg against a basket of currencies seems to be working effectively in serving the purpose of maintaining competitiveness of exports and production for the domestic market.
3.8. According to the Secretariat's report, major reforms in the taxation system resulted in significant improvements in revenue collection, tax compliance and auditing as well. The establishment of a committee dedicated to fiscal exemptions introduced more transparency into the system and reduced the number and value of exemptions granted. In addition, new mining tax regime has been implemented. The level of the central government debt has been on a downward trend and is among the lowest in the region mainly thanks to the implementation of Honiara Club Agreement between 2005 and 2012. However, loosening the “no borrowing restriction” from 2012
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3.9. Thus, Solomon Islands still faces a number of challenges, which require further attention of policy makers at national, regional and multilateral level. Let me pay attention to the few of them:
Firstly, consisting of so many of sparsely located islands and being remotely outlying from export markets, Solomon Islands faces significant constraints related to transport, communication and energy, which makes costs of doing business very high and has a negative impact on competitiveness.
Secondly, only 21% of country's economically active population is employed in the formal economy, while remainder is employed in informal or subsistence activities. Although literacy and numeracy among the school-aged population is increasing, only one in five adults in Solomon Islands is literate. Even though the country is making progress towards universal primary education, secondary school participation levels remain low. As one of the tools to address the employment issues, the Government of Solomon Islands rightly emphasizes the need to improve the education of people: a goal of ensuring that all Solomon Islanders have access to quality education is inscribed in the National Development Strategy 2016-2035.
Thirdly, tackling prevalent illegal and under-declared logging is a big challenge to the Government. More efforts are needed for ensuring that logging activities are conducted in a sustainable way in order to avoid deforestation. In this respect, it would be advisable to consider the possibility of joining the International Tropical Timber Organization, which promotes conservation of tropical forest recourses, their sustainable management, use and trade. Therefore, it would be interesting to hear explanations of the Government's future actions aiming at preventing deforestation and combating illegal logging.
Fourthly, fisheries sector is of major importance to the economy of Solomon Islands and the Government makes strong efforts to ensure the sustainable management of fish stocks and to combat illegal, undeclared, unreported (IUU) fishing including through the membership in the Parties to the Nauru Agreement. Hence, WTO disciplines on fisheries subsidies would be very much conductive in this regard.
Fifthly, FDI flows are relatively low and on a downward trend, despite the fact that the Solomon Island's investment regime is relatively open and the Government provides incentives in order to attract foreign investment. However, political instability, shortage of infrastructure, remoteness from markets, and – most importantly - difficulties in the area of land ownership, high tax rates, as well as inconsistencies in legislation discourage potential foreign investors. Since the last review in 2009, Solomon Islands was ranked 85th in the World Bank Doing Business Report, now, regrettably, the country moved down to the 104th place in the World Bank Doing Business Report 2017. Nevertheless, there is much of space for substantial improvement of the business climate and, I believe, the membership would be interested to hear more about the Government's plans in this area.
3.10. Also, I suppose that countries would appreciate to find out more about the functioning of the so-called Constituency Development Funds, Governments' actions in fighting against corruption and strengthening the competition rules.
Trade policy and practices by measures
3.11. Now, moving more specifically to the trade policy and practices, it is commendable that Solomon Islands makes efforts in the field of trade facilitation: in January 2015, its customs moved to the web-based version of ASYCUDA World, which improved efficiency in customs clearance processes for goods. In February 2016, Solomon Islands notified its Category A commitments under the Trade Facilitation Agreement, yet there are still steps needed to finalize Category C commitments. While the Government intends to ratify TFA once technical assistance requirements have been identified, it would be advisable not to delay this process.
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3.12. Let me mention that several legal acts were adopted in 2010 in order to align national legislation with the WTO Customs Valuation Agreement, but new rules have not been notified to the WTO. As customs' valuation is frequently disputed, notification would help to shed a light into this matter. Yet, reference price scheme is applied to a long list of products, it is difficult to find a justification for this, especially when considering food products, household goods, cars, electronic equipment, etc.
3.13. Lack of notifications persists in other areas as well, including TBT and SPS. I believe that efforts in providing notifications would pay-off very quickly, as increased transparency and better understanding of Solomon Islands' trade regime would stimulate trade and investment.
3.14. It is worth mentioning that Solomon Islands has made important steps unilaterally liberalizing its tariffs. Country bounds all of its tariff lines - most at around 80%, but its applied rates are much lower: currently the average applied rate is 9.3%, though it has slightly increased since 2009, when it used to be 9.1%. The average applied rate for agriculture is somewhat higher (as high as 10.1%). However, as it was also touched upon during the last review, several tariff lines still exceed their bound rates. Therefore, I would like to ask the delegation of Solomon Islands if there are any plans to comply with its tariff commitments. Also, please allow me to draw the attention to the fact that ad valorem duty rates provide more clarity for importers, thus it would be advisable to move to ad valorem basis in remaining few cases where Solomon Islands still applies specific duty rates.
3.15. The Secretariat report mentions that Solomon tax system is discriminatory and inconsistent; it also draws our attention to the rather long list of products for which export duties apply – timber, scrap-iron and fish (raw and frozen), live animals and seafood. Timber is a scarce resource and export duties might help in preventing deforestation. However, it is rather questionable whether export duties for fish, animal and seafood products do not prevent small producers from entering into the GVCs, especially in the fish processing, which is important for the whole region.
3.16. Also, I would like to point out that several governmental bodies perform the standard setting, which means that there is no unified infrastructure for regulation setting and conformity rules. Therefore, developing such a system would be an important step towards implementation of TBT agreement.
3.17. It should be noted, that the Government of Solomon Islands started looking into IPR protection laws aiming to improve country's situation as regards implementation of TRIPS agreement.
3.18. It is necessary to mention, that despite its limited export diversification and LDC status, Solomon Islands is putting great efforts to strengthen its trade relations with other countries in the region. Solomon Islands is a party to several regional economic and trade agreements: Melanesian Spearhead Group (MSG), Pacific Island countries Trade Agreement (PICTA) and South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA). Negotiations are ongoing on a free trade agreement PACER Plus that would include Pacific Islands Forum countries, Australia and New Zealand. This positive trend of close regional cooperation should be maintained and enhanced in the future because of its advantageous impact in improving of country's trade performance, strengthening its capacity to compete in more remote markets.
Conclusion
3.19. Before concluding my statement, I would like to remind that since joining the WTO in 1996, Solomon Islands played a constructive role in the negotiations, including cosponsoring a number of important and very relevant SVE's proposals. With MC11 approaching, it would be advisable that Solomon Islands participates actively and constructively in the process of shaping the package of possible outcomes of the future Conference, especially in the field of agriculture, fisheries subsidies, development dimension.
3.20. Finally, while going through the both reports prepared by the Secretariat and the Government, it appears to me that Solomon Islands faces numerous challenges in realizing its vision. It would be important to focus aid for trade on addressing the supply side constraints of country in line with its National Development Strategy 2016-2035.
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3.21. Lastly, the Government of Solomon Islands should already now start considering trade policy reforms for the time when the LDC status will no longer be applied to a country and the economic partners will not apply DFQF regime to its goods anymore. Negotiations of the free trade agreements with the most important trading partners would be an important step towards continuation of the preferential access to these markets.
3.22. Using this opportunity, I encourage all donor countries, in particular Solomon Islands' major trading partners, to give serious consideration to support Solomon Islands in realization of its National Development Strategy. At the same time, I urge the Government of Solomon Islands to continue its efforts to improve domestic policies, institutions and business environment by an open trade and investment policy regime.
3.23. This concludes my statement. I wish Solomon Islands a very successful Trade Policy Review.
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4 STATEMENTS BY MEMBERS
AUSTRALIA
4.1. At the start, let me express our sympathy following the recent earthquake which has affected Solomon Islands. To date there has been one reported fatality, but it has impacted more than 7000 people and destroyed or damaged more than 300 homes. Australia is working closely with the Government of Solomon Islands to support your impressive response efforts.
4.2. Australia is pleased to participate in the Third Trade Policy Review of Solomon Islands and we welcome the opportunity to learn more about trade reform in Solomon Islands.
4.3. Australia and Solomon Islands have a long history of partnership. Since its inception in 2003, the Australian-led Regional Assistance Mission to Solomon Islands (RAMSI) has worked in partnership with the Solomon Islands Government to restore law and order, rebuild national institutions and implement economic reforms. With contributions from New Zealand and other Pacific Islands Countries, RAMSI has helped to restore business confidence and has created the conditions for renewed economic growth and trade. As Solomon Islands' largest donor, Australia will continue to support stability, governance, growth and human development following RAMSI's conclusion in June 2017.
4.4. Two-way goods and services trade between Australia and Solomon Islands was worth over AUD165 million in 2015. Australia is also one of Solomon Islands' largest investors in sectors such as tourism, mining, agriculture and finance. We have a shared interest in a strong, open, rules-based system.
4.5. Australia applauds the economic reform agenda pursued by Solomon Islands since 2009. Reforms to foreign investment processes, the telecommunications sector, business laws and the performance of state owned enterprises have gone far towards improving the country's trade and economic performance over the past ten years.
4.6. Solomon Islands has proven to be one of the most active reformers in the Pacific Region but further reforms are needed to modernize the tax system, advance gender equality and establish a framework that supports competition. This is indeed a challenging agenda but one that Australia stands ready to support as the Government continues to strengthen and diversify the economy.
4.7. We welcome Solomon Islands' focus on facilitating engagement in bilateral, regional and multilateral trade frameworks and its efforts to integrate into the global trading environment. The Solomon Islands Growth Program (SIGP) is the flagship for Australian support for inclusive economic growth in Solomon Islands, worth AUD50 million over four years from 2016. Under SIGP, Australia will fund new infrastructure projects that address constraints to trade and investment and work in growth markets such as cocoa and coconut and tourism.
4.8. Another tangible commitment by Australia to prosperity and economic integration in our region is in the area of labour mobility. Under Australia's Seasonal Worker Program (SWP) over 142 Solomon Islands workers have been granted visas – a tangible example of our efforts to boost job access and regional labour mobility. Further recruitments are in the pipeline to increase Solomon Islands' participation in SWP.
4.9. Australia is committed to helping Solomon Islands expand its tourism potential. We have played a catalytic role in the recent commencement of regular cruise ship visits to Solomon Islands and the opening of new destinations. Cruise tourism offers real potential for growth in Solomon Islands. While the industry is still it its infancy, it is already helping to improve local tourism standards and boost the profile of the nation as a unique tourist destination.
4.10. Like Solomon Islands, Australia remains committed to successful regional integration. Australia welcomes the constructive role played by Minister Tozaka who has led Forum Islands Countries (FICs) in negotiations on the Pacific Agreement on Closer Economic Relations (PACER) Plus, which aims to promote economic development in Solomon Islands and other FICs through greater regional trade and economic integration. Australia looks forward to concluding market
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- 15 - access negotiations with Solomon Islands that will facilitate the increased trade of goods, services and investment between our two countries and the region as a whole.
4.11. We congratulate Solomon Islands for notifying its Category A commitments under the WTO Agreement on Trade Facilitation and encourage Solomon Islands to progress its domestic approval processes to allow it to accept the Agreement in a timely manner. The Agreement on Trade Facilitation when implemented will deliver practical measures to strengthen global trade and economic growth, bringing development and job creation benefits for WTO Members including Solomon Islands.
4.12. Solomon Islands has a very liberal investment regime with few restrictions in terms of sectors for foreign investors to enter. The Government recognizes that foreign investment can make an important contribution to economic development, most notably by increasing productivity and contributing to local employment.
4.13. Australia applauds Solomon Islands' commitment to sustained economic reforms and we encourage you to continue to promote economic growth in the years ahead.
EUROPEAN UNION
4.14. On behalf of the EU, let me express our sympathy on the devastating earthquake a few days ago.
4.15. Solomon Islands have a unique environment that includes 75% of known coral species, more than 30% of the world's coral reefs and the largest mangrove forest in the world. Due to its geographic location and conditions Solomon Islands is very vulnerable to climate change. This is something we need to keep in mind when discussing issues related to trade and environment in the WTO.
4.16. The economy of the Solomon Islands remains dependent on a few natural resources, logging and fishing, and is vulnerable to commodity price declines.
4.17. The EU would like to highlight some of the positive issues that have emerged during this period under review.
4.18. First, Solomon Islands has experienced positive economic growth since its last TPR in 2009 and made some positive strides in economic development, including poverty reduction and per capita income increase.
4.19. Secondly, Solomon Islands has adopted its first Trade Policy Framework (TPF) in 2015 which aims to improve the medium- to long-term performance of the economy as regards trade and foreign investment. The objectives of the TPF are incorporated in the National Development Strategy 2016-2035 for long-term economic policy. In this regard, the EU notes that the need for diversification of economic activity is particularly urgent. New sources of exports, growth, employment and government revenue are needed to sustain the living standards of the population in the immediate future, and to enable their significant and sustained improvement over the long term. Therefore, the EU encourages the Government of the Solomon Islands to continue its economic reform efforts.
4.20. Thirdly, Solomon Islands enacted its public Financial Management Act 2013 which aims to strengthen the framework for the management of public resources through increased transparency, accountability and fiscal reporting and tighter regulation of procurement. The EU encourages Solomon Islands to further pursue the reinforcement of its institutions to ensure a fair, transparent and predictable legal environment.
4.21. In this context, the EU would like to highlight the importance for the government to pursue further efforts to fight corruption. The EU calls on Solomon Islands to adopt its anticorruption legislation and to establish an Independent Commission against Corruption.
4.22. According to the report by the WTO Secretariat, Solomon Islands' focus on the multilateral trading system could be improved. In February 2016, Solomon Islands notified its Category A
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- 16 - commitments under the WTO Agreement on Trade Facilitation and has now established the National Trade Facilitation Committee, but has not yet submitted its letter of acceptance of the Trade Facilitation Agreement. The EU calls on Solomon Islands to enhance as far as possible its participation in WTO discussions and to complete its internal legislative process for securing prompt approval of the Trade Facilitation Agreement, as also noted by the Discussant.
4.23. The EU and Solomon Islands have been partners since the country's independence in 1978. Being a Least Developed Country (LDC), Solomon Islands benefits from the EU support via the "Everything But Arms" scheme, which offers duty and quota free access to the EU market.
4.24. The EU has submitted a handful of questions and we are particularly interested in receiving information on the government's plans to introduce customary lands policy reforms.
4.25. The EU remains committed to support Solomon Island's efforts to face socioeconomic challenges and is confident that this exercise will help Solomon Islands in carrying out its economic reforms in compliance with its international commitments in this forum.
CANADA
4.26. On behalf of Canada, I would like to welcome the delegation from Solomon Islands, including the Honourable Minister Tozaka and Permanent Secretary Ma'ahanua to this third trade policy review of Solomon Islands. I would also like to extend our sympathy regarding the recent earthquake in your country. Canada congratulates Solomon Islands for the important improvements in economic development they have achieved since their last trade policy review in 2009. Solomon Islands have proactively implemented a series of measures, and committed to many more, which will improve their trade and investment climate.
4.27. In the face of challenging circumstances, Canada welcomes Solomon Islands' commitment to broad and comprehensive policy reforms. These, together with trade liberalization, are keys to the long term development, economic growth and prosperity of Solomon Islands.
4.28. In particular, I would like to highlight five areas where Solomon Islands has taken significant steps toward improving its economy:
4.29. First and foremost, Canada is pleased that Solomon Islands has elaborated a long term approach to its economic policy, as Canada encouraged Solomon Islands to do during its last trade policy review. Canada is hopeful that the National Development Strategy 2016-2035; the 2015 trade policy framework; the newly established National Trade Development Council; and the National Strategy for the Economic Empowerment of Women and Girls will lead to greater economic inclusion and participation in the formal economy.
4.30. Second, Canada is encouraged by the openness of the Government of Solomon Islands to foreign direct investment and its recognition of the important contribution FDI can make to economic development. Canada commends the government's commitment to ensuring that foreign investments are strategic and in line with the country's national objectives with respect to the environment and social structure. We look forward to the release of the investment policy document currently under preparation.
4.31. Third, Canada salutes the Government's commitment towards the development of a national IP strategy and looks forward to its implementation. Additionally, Canada hopes that Solomon Islands will follow through on its intention to become a member of the World Intellectual Property Organization; to become a signatory to relevant international IP treaties; and to establish a national IP office.
4.32. Fourth, Canada compliments Solomon Islands for its sustained involvement in the WTO. The mechanisms put in place to support this involvement, including the 2012 opening of Solomon Islands' permanent mission in Geneva, will become increasingly valuable as Solomon Islands nears graduation to developing country status. Canada welcomes Solomon Islands' notification of its intention to ratify the Agreement on Trade Facilitation with the submission of its category A, B and C notifications. Solomon Islands could continue on this trajectory by participating in WTO
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- 17 - plurilateral initiatives, including by becoming an observer to the Agreement on Government Procurement.
4.33. Finally, Canada notes with great interest the Solomon Islands' Constitutional Reform Unit recommendation for the establishment of a federal system with more powers and authority delegated to provinces. Such a system can present some challenges but also offers tremendous opportunities, all of which are familiar to Canada.
4.34. Despite all these progresses and promising initiatives, there remain areas which would benefit from further attention on the part of the Solomon Islands government.
4.35. For example, we are concerned by Solomon Islands' regression to the 112th rank on the 2016 World Bank Ease of Doing Business Index, down from a high of 74th place in 2012. Full implementation of its WTO obligations would improve the Solomon Islands' performance in this area.
4.36. Canada would encourage Solomon Islands to adopt measures to ensure the application of the provisions of the Technical Barriers to Trade (TBT) Agreement and to notify those measures to WTO Members as required under Article 15.2. This will help build an effective and enabling regulatory framework for further growth and development.
4.37. Finally, as was the case during its 2009 trade policy review, Solomon Islands' merchandise exports are heavily concentrated in a few sectors, and particularly in the forestry sector, which accounted for over 39% of Solomon Islands' exports in 2015, according to UN Comtrade. In addition to diversification efforts under the National Development Strategy 2016-2035, Canada would encourage Solomon Islands to intensify its efforts to combat illegal logging and enhance its forestry management practices before this important natural resource is depleted and deforestation reaches a critical level.
4.38. In conclusion, Solomon Islands' trade and economic policy is moving in a positive direction, which will deliver inclusive and sustainable economic growth for its citizens. The Government of Canada thanks Solomon Islands for the responses it has provided to our advance written questions. I wish the delegation a fruitful trade policy review.
THE SEPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU, KINMEN AND MATSU
4.39. As we can see from the reports, the Government of Solomon Islands has successfully maintained its public sector debt in a rate of 9% of GDP by the end of 2015, which is one the lowest in the Pacific Islands.
4.40. It is important that Solomon Islands continues to develop its regional and bilateral cooperative trading relationships, while at the same time actively participating in the regular work of the WTO, expanding economic cooperation with other Members, and striving to diversify its economy.
4.41. It is noted that the Government of Solomon Islands has moved toward the graduation from the category of Least Developing Country (LDC) by designated tourism industry, telecommunications, and transport sectors to diversify its traditional economy sectors in logging, mining, fisheries and agriculture. We look forward to having the opportunity of working more closely with Solomon Islands in the future, especially in the tourism sectors. It is encouraged that Prime Minister H. E. Manasseh Sogavare had visited the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu in this July to further tighten the relationship with us and explored the business opportunity with Solomon Islands.
4.42. Although the value of two-way trade between us and Solomon Islands is only about US$14 million a year at present, we are sure that the multilateral trading mechanism that bonds us together through the WTO provides plenty of opportunities for us to develop closer trade and economic cooperation in the future.
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UNITED STATES
4.43. We have a special word of concern about the recent earthquakes, note that damage reports are still incomplete but would like to share our thoughts and prayers with your people.
4.44. Solomon Islands is a valued friend and partner of the United States. We are linked by close ties of history, as well as a shared commitment to peace and prosperity in the Pacific. Trade between us is growing – U.S. exports to Solomon Islands are increasing, and in 2016 appear poised to hit their highest level in over two decades – and Solomon Islands is also a beneficiary under our Generalized System of Preferences. In bilateral terms, the United States does not represent one of Solomon Islands' biggest trading partners, but some major U.S. businesses are present there through regional affiliates and distributors in ways the bilateral data do not fully reflect.
4.45. Solomon Islands continues to face serious development challenges. It is a small island nation, and a least developed country, with an excessive reliance on fast-depleting natural resource export In addition to these development-related challenges come the additional challenges associated with being a chain of hundreds of vulnerable islands, and continued recovery from a political crisis at the start of this century. There have been numerous positive steps taken – which I'll turn to in a minute – but despite those useful steps, the trend lines are not all in a positive direction. I hope our discussion can highlight ways the Solomon Islands can use trade, and its WTO membership, to sustain and accelerate positive trends, and to promote its development.
4.46. First, Solomon Islands should be commended on the important steps taken since the last review (in 2009) to strengthen the economic policy framework. There have been reforms to the monetary policy framework and to exchange rate policy. There have been important reforms to the tax regime and to compliance efforts. Legislation to implement the Customs Valuation Agreement was enacted. Legislation for public procurement was enacted. Competition was successfully introduced in the important telecommunications sector. Anti-corruption legislation has been introduced. And the overall results have been positive: six years of solid economic growth, increases in per capita incomes, and a significant fall in government debt.
4.47. However, we must also speak candidly of the fact that not all the recent trend lines are in a positive direction. Overall GDP growth rates have been declining. Trade has also been declining, with both exports and imports posting declines in each of the last three years, even at a time of economic growth. The over-reliance on logging exports – already noted as a key concern at the last review – continues to increase, even as experts predict forest resources could be completely depleted in less than five years. And as the Secretariat report notes, foreign direct investment – critical for the diversification of the country's economy and export base – has actually been declining.
4.48. Reversing these trends is not just desirable, it is critical, given the imminent depletion of forest resources. It is good that the Government has identified diversification of the economy as a top priority, and recognized that increasing foreign investment can play a key role in achieving that. But while the report details many recent reforms in other areas, there doesn't appear to have been comparable progress on improving the investment climate; and while the Secretariat report notes that an investment policy document is under preparation, no specific reforms or new measures are previewed. We urge Solomon Islands to consider ways to address the land ownership issues that many foreign investors consider an impediment to investing in Solomon Islands. We would also encourage reforms to increase transparency and to establish clearer parameters for government discretionary powers.
4.49. We would also urge prioritization of measures to combat illegal logging and illegal forest products trade and to promote reforestation. Log exports already represent by far the largest share of Solomon Islands exports, and the huge disparity between Solomon Islands' trade statistics and those of some of its major log export markets suggests much of the trade may be illegal. Moreover, reforestation and plantation management appear to be impeded in part by the land ownership issues that affect the entire economy but are especially acute in this sector. Given the importance of timber for Solomon Islands trade, and the adverse environmental, economic and social consequences that loom if this resource is depleted through illegal logging, we urge the
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Government to prioritize meaningful measures to combat illegal logging and ensure that timber products are legally harvested and exported. We encourage you to draw on the expertise of your trading partners in addressing this challenge.
4.50. Finally, the Secretariat report highlights a number of instances where Solomon Islands has yet to fully comply with its WTO obligations. 58 tariff lines have applied tariffs that exceed their bindings, while another 28 tariff lines may exceed their tariff bindings. The internal goods tax is applied at a higher rate on imports than on domestically produced goods. The Government has not adopted legislation to implement the TBT agreement, nor made any notifications under that Agreement, including of existing measures. The Government has not implemented any legislation to implement the TRIPS agreement, nor made a notification under the TRIPS Agreement or a submission to the TRIPS council. The Government has not notified any SPS measures to the WTO. These are just the most obvious examples.
4.51. While we recognize the capacity challenges that Solomon Islands faces, it is disappointing that these same issues were flagged during the last review, and in the interceding seven years of growth and political stability, they have still not been addressed. This is important for the WTO system, which relies on each of us to fully implement the commitments we signed up to. But the importance of these rules is arguably greater for the Solomon Islands than it is for the WTO, because the transparency and predictability of these WTO commitments will help make the Solomon Islands more attractive to traders and investors, and promote the economic diversification on which the country's future depends. We would urge the Government to prioritize addressing these gaps, and encourage it to seek the assistance of the WTO Secretariat or other Members should it encounter difficulties in doing so.
4.52. Solomon Islands is closer to achieving its development objectives than it was at the last review, thanks to its hard work; and we want to help our Solomon Islands friends address the more complex challenges ahead and keep moving forward.
NEW ZEALAND
4.53. At the outset, I would like, on behalf of the people of New Zealand, to convey my sincere condolences in respect of the devastating earthquake that hit last week. Our heartfelt sympathies are with the family of the child who died and with the people of the provinces of Makira, Malaita and Guadacanal where I understand the damage has been most severe. New Zealand knows something of the devastating impact earthquakes can have and we are working closely with the Government of the Solomon Islands to assist in the recovery process.
4.54. Turning to the purpose of our meeting today, New Zealand welcomes this opportunity to engage with Solomon Islands on the occasion of its fourth Trade Policy Review. We appreciate the Secretariat's thorough outline and the Minister's overview of the challenges and opportunities that lie ahead. We noted the emphasis he has placed on both the reform programme and its implications for trade policy and welcome his commitment to deepened regional economic integration, not least through the PACER-Plus negotiations. Our thanks also to the discussant who has crystalized the issues the Solomon Islands faces, while acknowledging the locational and size-related difficulties it has. In particular, New Zealand expresses its appreciation to the Discussant for her very practical suggestions for the country's trade policy going forward.
4.55. New Zealand and Solomon Islands have a long and friendly bilateral relationship. Since the previous review in 2009, two-way trade has remained strong albeit relatively modest at NZ$37 million, however New Zealand's economic relationship with the Solomon Islands continues to develop along with the growth in the Solomon Island's economy. In recent years, our relationship has been underpinned by New Zealand's participation along with Australia in the Regional Mission to Solomon Islands (RAMSI), which has helped create the stable conditions that have led to significant economic growth in Solomon Islands and set the scene which enables our trade relationships to grow further.
4.56. In the economic sphere, both Solomon Islands and New Zealand benefit from Solomon Islands' participation in the Recognised Seasonal Employer (RSE) Scheme. New Zealand has progressively increased the cap under the RSE scheme from 8000 to the recently announced increase to 10500 for the 2016/17 season. Increased labour mobility, has delivered mutual
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- 20 - benefits through increased productivity for New Zealand's growing horticultural industry and significant employment and remittance opportunities for Solomon Island nationals.
4.57. New Zealand appreciates the challenges faced by Solomon Islands as a least developed country in regards to a growing schedule of international engagements and obligations. In this regard, we commend Solomon Islands having notified its Category A commitments under the Trade Facilitation Agreement. We encourage the Solomon Islands to ratify this agreement as soon as possible, noting that only 8 more Members are needed to ratify before this Agreement enters into force.
4.58. It is nonetheless a concern that Solomon Islands has not yet made any notifications to the WTO since 2009. The WTO's reporting that 58 tariff lines exceed WTO bindings is also something that needs to be urgently addressed. We look forward to any clarifications and actions that Solomon Islands can make in regards to these matters. Consistency around reporting – and being up to date- is of systemic benefit to all Members, including the Solomon Islands.
4.59. New Zealand has also been working closely with Solomon Islands in the fisheries sector to improve compliance capabilities – not least in terms of the EU regulatory requirements - and enhance export revenues for Solomon Islands' important tuna exports. Similarly, New Zealand has also appreciated the Solomon Islands efforts in the WTO to advance fisheries subsidies negotiations. We now look forward to continuing to work together to ensure MC11 delivers effective fisheries subsidies prohibitions as called for in SDG Target 14.6.
4.60. Fossil fuel subsidy reform is another area of significance. It is an issue which we consider to be of systemic interest to the multilateral trading system. It has of course also been recognized by Leaders through its inclusion in the Sustainable Development Goals. In this regard, New Zealand welcomes Solomon Islands' increased focus on renewable energy, and we underline the importance of continuing fossil fuel subsidy reform for all WTO Members.
4.61. New Zealand is encouraged by Solomon Islands efforts for multilateral, regional and bilateral integration in the Pacific region. For example, we are cooperating well together to achieve a positive outcome in the Pacific Agreement on Closer Economic Relations (PACER) Plus regional trade agreement negotiations. These are now close to conclusion and we welcome Minister Tozoka's personal commitment and energy to this concluding phase. We appreciate the continued engagement of the Minister in this regard. New Zealand and Australian Trade Ministers recently wrote to Forum Island Trade Ministers to help facilitate concluding the PACER Plus negotiations.
4.62. PACER Plus will be a high quality agreement with a unique development dynamic. PACER Plus was designed from its inception not to be a conventional free trade agreement that focused exclusively on market access. This reflects the importance of the Pacific region to New Zealand and Australia and the challenges confronted by some of our close Pacific neighbours. As a trade and development agreement, PACER Plus presents a unique opportunity for participating Forum Island Countries to increase their participation in the international trading system and, with the assistance that will be provided by Australia and New Zealand, use trade as an instrument to alleviate poverty, increase living standards of their people and meet the United Nation's sustainable development goals.
4.63. The Joint Commitment for Development programme is an important overarching document for the bilateral relationship and has the goal of achieving economic growth, a well-educated workforce and a safe and stable Solomon Islands. We look forward to continuing our strong cooperation with Solomon Islands to realize this goal.
4.64. New Zealand welcomes Solomon Island's commitment to the multilateral process and looks forward to further discussion of the issues we have raised during the course of this review.
VANUATU ON BEHALF OF THE PACIFIC GROUP
4.65. The Pacific Group wishes to convey its sympathy to the Government and people of the Solomon Islands for the recent 7.8 magnitude earthquake that damaged 35 houses in Makira. The Pacific Group also supports the statements made by the ACP Group and the LDC Group.
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4.66. The Solomon Islands is a valued member of the Pacific Group, an a signatory to number of regional trade agreements such as the Pacific islands Trade Agreement and the Melanesian Spearhead group trade agreement which are aimed at closely integrating the region. The Solomon Islands is the third largest Pacific country in terms of population size and therefor an important market and trading partner. Fiji and Papua New Guinea account for 6.5% in 2010 and 5.1% in 2015. The Solomon Islands is well known throughout the Pacific islands for its popular tuna export, Solomon Blue.
4.67. The Group wishes to thank the Government of the Solomon Islands and the WTO Secretariat for their reports. Both reports provide a good overview of the trade and related policies and trade strategies of the Solomon Islands.
4.68. The Pacific Group welcomes the various trade reforms that have been undertaken by the Solomon Islands since its last review in 2009. These included:
The adoption of its dedicated National Trade Policy in 2015 which aims to transform the Solomon Islands into a competitive economy, will guide Solomon Islands trade initiative and mainstream trade policies into the national development policies. Customs reforms which include the modernization and automation of customs systems thought the adoption of ASYCUDA World in 2013, streamlining of HS System, and the enactment of the customs valuation legislation. Adopted a public procurement legislation, and a new Biosecurity Law (2013). Has established a National Trade Development Committee, chaired by the Minister, with Members from Government and the private sector, to deal with all trade issues. These reforms are supported by the National Transport Plan (2007-2026) and the National Infrastructure Investment Plan (2013). The liberalization of the telecommunications sector is increasing the accessibility of mobile telephony and internet.
4.69. In addition to this, despite the limited institutional capacity the Solomon Island sis doing its best to implement its WTO obligations. On the WTO Trade Facilitation Agreement, the Solomon Islands has submitted its notification of Category A commitments and working on ratification. The Group also notes from the report that other reforms are ongoing and much more are contemplated to improve trade policy and the business and investment environment including a competition policy and a revision to the Customs Act.
4.70. However, all these reforms will not make sense unless the main problem of productive capacity, standards conformity and other challenges as reflected in both reports are not addressed. Like many small islands States in the Pacific, the Solomon Islands' economy is supported by a limited range of exports. These include forestry logs, fisheries and a few agricultural products. These products make up around 28% of GDP. Except for fish much of these are exported in raw of semi-processed forms. Much more needs to be done to promote value adding and processing as envisaged in the national trade policy framework. In addition, the services sector, particularly tourism holds potential for trade and growth but tourism infrastructure and tourism services will need to be enhanced.
4.71. While Solomon Islands had experienced strong growth in the aftermath of the financial crises and maintained modest growth in recent years, significant challenges remain. The closure of the mining sector and expected decline in forestry sector are likely to reduce future growth prospects. This is particularly so if forestry, which is a source of export earnings and export tax revenue declines. These declines in export revenues are starting to be felt as reflected in trade deficits for the past three years, as shown in the WTO report. Solomon Islands also depends heavily on trade preferences such as GSP for much of its trade and therefore the erosion of these preferences such as GSP for much of its trade and therefore the erosion of these preferences brought about by mega-regional FTAs and the deepening of FTAs by its major trading partners signals a future trading environment that would be highly competitive. The possible graduation of the Solomon Islands from LDC status will also deny them the trade preferences on which they depend. In the face of all these, the frequent occurrence of natural disasters such as the recent earthquake could disrupt the gains that have been made to strengthen domestic industry and trade.
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4.72. Therefore, the Group underscores the important role of the WTO and Aid for Trade. The WTO, in providing an open, transparent, stable and fairer trading system for small countries and LDCs like the Solomon Islands. Aid for Trade, in addressing the above trade challenges, and in translating the national trade policy objectives of the Solomon Islands Government into tangible benefits on the ground. In this connection, the Pacific Group acknowledges the support already provided through the EIF and by development partners to assist with reforms already undertaken and those which are ongoing.
4.73. However, the Group notes with concern that the overseas development assistance to the Solomon Islands is declining as stated in the WTO report. The Pacific Group would like to call on development partners to provide the required assistance to enable the Solomon Islands Government to complete the planned reforms that will improve the business environment and promote investment, but more importantly, will strengthen the productive capacity, increase domestic production, promote value adding and diversify the economy to other agricultural products such as cocoa, copra and palm oil. These would help strengthen trade capacity, support economic growth and create employment for the Solomon Islands.
SINGAPORE
4.74. We express our solidarity with the people of Solomon Islands who have been affected by the recent earthquakes.
4.75. We note the positive economic growth in Solomon Islands since its last Trade Policy Review. This has been accompanied by a decline in poverty rates and an increase in per capita income. We welcome Solomon Islands' National Development Strategy 2016 to 2035, as well as the efforts to mainstream trade into this strategy in order to boost trade and investments. While the Secretariat report notes that Solomon Islands' current interest in the multilateral trading system is limited, the high-level delegation from Honiara to the WTO today suggests otherwise. We hope that the delegation will find the comments from Members today useful in its formulation of its trade strategy, and also the benefits the multilateral trading system can bring for growth and development. As a small island city-state which has benefited greatly from trade, Singapore believes that that trade liberalization, too, can benefit Solomon Islands significantly, and complement its National Development Strategy in terms of creating jobs and improving living standards.
4.76. A key step to boosting trade growth is that of ensuring that trade can flow effectively and efficiently. The WTO Trade Facilitation Agreement, when implemented, will play a major role in facilitating this. We welcome Solomon Islands' submission of its Category A commitments, and are heartened to hear that Solomon Islands has already started implementing provisions of the TFA. We hope that Solomon Islands' ratification process will be completed as soon as possible. We also encourage Solomon Islands to accept the Protocol of Amendment on the TRIPS Agreement, which can bring significant public health benefits to developing countries and LDCs including the Solomon Islands.
4.77. It is also crucial to ensure that traders can operate under predictable conditions. In this regard, we strongly urge the Solomon Islands to bring its 58 tariff lines into conformity with its WTO commitments, and also to submit its notifications under the WTO Agreements. We encourage the Solomon Islands to tap on the assistance offered by the WTO Secretariat to boost its technical capacity. Singapore also stands ready to provide relevant assistance through our training programmes organized together with the WTO Secretariat.
BRAZIL
4.78. At the outset, Brazil wishes to express its solidarity to the people of Salomon Islands for the tragic loss of life and the overall destruction during the recent earthquakes which hit the country.
4.79. We are glad to learn that Solomon Islands` economy has grown steadily since its last trade policy review, including a 7.9% peak in 2010. Trade has certainly contributed to this result – according to the secretariat review, exports and imports of goods and services accounted for approximately 50% of the GDP in the last five years.
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4.80. Brazil also congratulates Solomon Islands' for its efforts to address the economic challenges ahead with enabling legislation and programs, such as the upcoming Customs Act review, the National Transport Plan 2007-2026 and the National Infrastructure Investment Plan of 2013. The previous reforms in areas such as competition and investment are already bearing fruit to consumers in the telecom segment. Further reform is coming aimed to tackle productive capacity issues, improving infrastructure, health and education.
4.81. For Brazil, trade liberalization must proceed in a manner which respects fundamental differences and asymmetries in the levels of development of the WTO Members; least developed Members' endeavors to promote economic diversification and to reduce vulnerability play an important role in this regard. In this sense, Solomon Islands is to be commended for its objective to diversify its economy beyond logging, mining, fisheries and other agricultural goods. The expansion of the services sector is a welcomed development in areas such as transport and telecommunications.
4.82. Brazil hopes to deepen its bilateral relationship with Solomon Islands. The bilateral trade flows remain extremely modest, and there is room for improvement. Brazil continues to follow with interest the domestic developments in the Solomon Islands with regard to its trade policy. Let me conclude by wishing to the delegation of the Solomon Islands a successful Trade Policy Review.
PAKISTAN
4.83. We would like to express our sympathy with the people and the government of Solomon Islands on the recent earthquake.
4.84. Despite the fact that Solomon Islands is a Least Developed Country with the economy relying on a few natural resources, growth has ranged between 2% and 10% since 2010. This is not a mean feat. Since its last TPR, Solomon Islands has shown a decline in the incidence of poverty and an increase in per capita income. Challenges remain, but it seems that Solomon Islands is aware of them and trying to tackle them with appropriate policy measures.
4.85. Pakistan appreciates the reforms brought about by Solomon Islands in achieving price stability which include the adoption of a new debt management strategy, a new public financial management law, and the strengthening of the revenue collection system. Pakistan also appreciates the new Development Strategy of the Solomon Islands, which aims to diversify the sources of growth away from logging and subsistence activities and towards other sectors such as mining, fishing, and tourism. Improving the environment for business, trade and private sector-led growth is also much appreciated.
4.86. Pakistan has observed that Services continue to be the largest sector of the economy of Solomon Islands, accounting for about 57% of GDP in 2014. Financial system assets grew strongly during the review period. Similarly, in the telecommunications sector, there has been significant growth in the mobile segment. After the adoption of the Telecommunications Act in 2009 there was a marked liberalization of the sector. Maritime sector also has potential for further growth. Pakistan would encourage Solomon Islands to focus more on its services sector and seek to attract more foreign investment in these sectors.
4.87. Pakistan appreciates that Solomon Islands have notified their Category A commitments and would like to encourage the Solomon Islands to ratify the TFA once it has identified its technical assistance requirements.
4.88. Pakistan and the Solomon Islands have recently formalized their diplomatic links. Pakistan and Solomon Islands feel that there are opportunities for furthering their bilateral relations, especially in the field of Education.
DOMINICA ON BEHALF OF THE OECS WTO MEMBERS
4.89. I make this statement on behalf of the OECS WTO Members.
4.90. The Secretariat's Report and the Report of the Government of the Solomon Islands show a small vulnerable economy, a small island developing state and a least developed country in clear
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- 24 - acknowledgement and recognition of the significant challenges and vulnerabilities that it faces from its size and remoteness, but which is nonetheless determined to overcome those challenges to pursue inclusive development and poverty alleviate.
4.91. In its report, the Government highlights some of those challenges including shortage of productive capacity, poor infrastructure, access to finance and credit for small businesses, high utility costs and expensive communications. The Secretariat report also notes the heavy exposure to natural disasters and external shocks. In that regard our sympathies goes out to the government and peoples of the Solomon Islands for recent earthquake. These are challenges that the Member States of the OECS can fully understand and associate with.
4.92. Despite these challenges, it is commendable that since the last review the Solomon Islands have recorded economic growth ranging from 2% and 10% since 2010. While this growth has been trending downwards, it has remained steady in recent years. The reports also indicate declines in the incidence or poverty and a strong increase in per capita income. The strides in economic development have enabled the Solomon Islands to meet two thresholds for LDC graduation placing it at the cusp eligibility for graduation. These achievements are certainly to be commended.
4.93. We also note the positive sectoral performance most particularly in the logging sector. It is however a concern that there is a very heavy reliance on that one sector. This tends to be common feature of very small economies, and the challenge and policy imperative for economic diversification is one which all small states face. The potential of the tourism industry and the telecommunications and transport sectors are therefore encouraging.
4.94. It would be important to note, however, that despite the progress made and the impending LDC graduation, many of the challenges and vulnerabilities will persist as Solomon Islands will continue to remain a small island developing state and small vulnerable economy. Continued financial support, technical assistance and capacity building including through Aid for Trade and the EIF as well as special and differential treatment in the WTO remain important.
4.95. As an SVE/SIDS and LDC, it is evident and to be expected, that for the Solomon Islands trade is vital and integral and indispensable. As the report states, this reliance on trade underpins the Solomon Islands' commitment to pursuing policies which promote the expansion of a liberal trading regime and greater diversification of domestic production to secure more value added from exported goods and services. The OECS therefore commends the Solomon Islands for the adoption of its first formal trade policy framework in 2015 which seeks to mainstream trade into its national development strategy.
4.96. We also note and commend the Solomon Islands for the extensive policy and economic reforms and the legislative and regulatory developments that the Government has undertaken since the last review. These include modernization of the Customs Act, the National Transport Plan, the National Infrastructure Investment Plan and its plans for reforms in intellectual property.
4.97. The WTO and the Multilateral Trading System is vitally important for LDCs and small island economies such as the Solomon Islands. The Government has declared its commitment to the WTO framework and the progress it has made to implement and domesticate the WTO Agreements. The establishment of its missions in Geneva is a clear indication of this. The Solomon Islands and the OECS share the same building so we know the capacity limitations faced which we also share. But we commend the Solomon Islands for its engagement in a number of areas including the LDC issues, SVE issues, and fisheries subsidies. As we look forward to the work and agenda for MC11, the OECS and the Solomon Islands will continue to advance the interests and concerns of LDCs and SVEs.
JAPAN
4.98. We, the Solomon Islands and Japan, are connected to each other by the Pacific Ocean, and have been important partners for years. We share a wide range of policy issues, such as global climate change and prevention of natural disaster, and have addressed those based on the mutual cooperation.
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4.99. In this sense, this year, we have reached a remarkable milestone for deepening our mutual relationship, which was the establishment of our Embassy in Honiara. Japan will make continuous efforts to maintain and further develop the strong ties with the Solomon Islands.
4.100. Let me begin by touching on the general economic situation. According to the Secretariat's report, the Solomon Islands' economy has been achieving sustained economic growth since the last review. Among others, the service sector has been becoming the largest sector in its economy and reached approximately 57% of its GDP in 2014.
4.101. Japan positively evaluates that Solomon Islands has undertaken newly formulated long-term economic policies toward inclusive growth and reducing poverty.
4.102. Now let me briefly touch upon its trade policies.
4.103. Solomon Islands have been engaged in activities at the WTO since its accession in 1996. For example, it suggested a valuable workshop related to small economies and has joined approximately 60 technical assistance activities, each of which Japan commends. On the other hand, Japan believes that The Solomon Islands haven't taken part in any plurilateral agreement negotiations. We hope that Solomon Islands actively engage in those negotiations.
4.104. When it comes to the RTAs, the Solomon Islands have concluded 5 RTAs, and are currently in negotiations with the EU. Japan hopes that the Solomon Islands continuously engage in the trade liberalization and that its already-concluded RTAs further reinforce the Multilateral Trade System.
4.105. Finally, let me make a couple of comments on some specific issues.
4.106. First, I will speak briefly about the Trade Facilitation Agreement. Although Solomon Islands have not yet joined the Trade Facilitation Agreement, it established a committee for trade facilitation and is now proceeding with preparation for category notification. Also, Japan commends that it established a taskforce aiming at establishing a special zone.
4.107. Secondly, Japan encourages Solomon Islands to undertake appropriate reforms including public safety, adequate port usage fee and skilled port facility workers, each of which are important elements to unleash its potential.
4.108. In conclusion, I would like to express our strong wish to continue cooperation between the Solomon Islands and Japan.
REPUBLIC OF KOREA
4.109. On behalf of the Government of Korea, I would like to express my deepest sympathy to the people of Solomon Islands, who were seriously inflicted by the recent earthquake.
4.110. Since the establishment of the bilateral diplomatic relationship in 1978, Korea and Solomon Islands have developed a sound bilateral economic relationship. But, at the same time, I must say that the two countries still have a large room for materializing the full potential of our economic relations. In particular, the bilateral trade heavily depends on a very limited number of products. Korea mainly imports fishery products from Solomon Islands, while the export from Korea to Solomon Islands is concentrated in automobiles. Korea hopes that the two countries continue expanding its bilateral trade and diversifying our trade products.
4.111. In addition, many Korean business people are interested in sea-ports infrastructure- building and fishery products processing. In this regard, Korea also hopes the investment into Solomon Islands increases in the near future, too. Also, Korea hopes our two countries keep seeking ways to enhancing investment bilaterally and multilaterally.
4.112. As the Secretariat report says, although Solomon Islands' participation in the WTO has been limited, it activities are recently increasing. Korea welcomes that Solomon Islands has notified its category A commitments under the Trade Facilitation Agreement and hopes that
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Solomon Islands will soon finalize all the necessary procedures for the ratification of the Agreement.
FIJI
4.113. At the outset, the delegation of Fiji, wishes to join other delegation in expressing its deep sympathy with the Government and the people of Solomon Islands on the recent 7.8 magnitude of earthquake that struck 130 kilometres from the capital Honiara and the subsequent damages incurred. Having experienced natural disasters such as TC Winston, Fiji understands well the feelings of such losses.
4.114. The delegation of Fiji also wishes to welcome H.E Hon. Minister Tozaka and the capital based delegation of Solomon Islands to Geneva. Fiji also associates itself with the statement made by the Pacific Group.
4.115. Fiji commends Solomon Islands on the positive reforms since its last Trade Policy Review. Being a small economy and an LDC, amid the exponential challenges, of infrastructure, high cost of doing business, distance and isolation from major markets, the Government of Solomon Islands has managed to have made profound progress in the area trade, investment and economic growth.
4.116. Solomon Islands and Fiji have a long standing trade and economic relationship. Fiji and Solomon Islands are both parties to the Melanesian Spearhead Group Trade Agreement. Fiji looks forward to working with Solomon Islands on areas of common trade interest in the bilateral, regional and multilateral forum.
4.117. Fiji wishes to congratulate the Government of Solomon Islands for adopting the legislation on customs valuation, undertaking its category A commitments under the Trade Facilitation Agreement and adopting the public procurement legislation.
4.118. Furthermore, we wish to recognize the progress of Solomon Islands in the area of transparency and accountability for its monetary authority.
4.119. In addition to this, the 2015 Trade Policy Framework (TPF) of Solomon Islands outlines a number of policy measures and strategies to shape the trade, investment and economic landscape of the nation. We also note the technical assistance that will be required by Solomon Islands in implementing its Trade Policy Framework. Fiji is confident that with the successful implementation of the Trade Policy Framework of Solomon Islands, the economy will experience further positive growth and development.
4.120. Fiji encourages Solomon Islands to further capitalise on the LDC concessions under the multilateral trading system and also urges the developed countries to positively consider the S&DT provisions within the WTO agreement that will benefit small economies including LDCs like Solomon Islands.
4.121. Fiji and Solomon Islands have strong interest in the fisheries sector and other development issues. Fiji looks forward to working with the Solomon Islands through the SVE, ACP and the Pacific Group in areas of common interest at the WTO.
UGANDA
4.122. At the outset, my delegation expresses its deep sympathy to Solomon Islands for the earthquake that has taken place in that country and extends its condolences to the families of the victims.
4.123. We note with satisfaction that the Government of Solomon Islands has put institutional framework in place to streamline the main principles that will guide trade policy in that country. They have national development strategies for national policies guidelines and a national trade development council to focus on trade policy issues, which is aimed at overcoming the vulnerabilities and open up new possibilities for the Islands.
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4.124. This should help to contribute to the economic development and eventually enjoyment of goods and services the Solomon Islands may need. But we note that most of the goods and services enjoyed by Solomon Islands are not provided locally. The trade policy should therefore be to diversify and boost domestic production for consumption and exports.
4.125. Solomon Islands can utilize aid for trade provisions to improve its trading capacity and more investment in the tourism sector will go a long way to open up the Island to the global trade in services.
4.126. Fisheries is one of the main economic sector activities and it should be put in place proper and effective management and protection of that sector. All this should be to help mainstream trade under the National Development Strategy for an integrated engagement which would assist in the medium- and long-term performance of the economy and a service policy platform that builds upon and coordinates sectoral priorities.
INDIA
4.127. First of all, I extend our deepest sympathy to the people of Solomon Islands who have been affected by the recent earthquake.
4.128. We have noted from the Government and Secretariat reports that since the last trade policy review, Solomon Islands has taken several positive steps to promote growth and economic development including formulating a dedicated trade policy framework, progress in the fisheries sector and taking steps to promote investment. During the period, the incidence of poverty has declined and per capita income has increased. Reforms have also been undertaken to strengthen fiscal management and revenue collection. We have also noted the challenges for the economy include high cost of public services provision due to its geographical setting, narrow economic base, and dealing with poverty and vulnerability to economic shocks and natural disasters. Despite the challenges, the economy of Solomon Islands has expanded by 2% in 2014 and 3.2% in 2015.
4.129. India and Solomon Islands share warm and friendly relations. Under the Indian Technical and Economic Co-operation programme, India has been offering scholarship slots to experts and professionals from Solomon Islands for the capacity building in the area of human resources. India is also working with Solomon Islands to offer assistance in the areas of renewable energy, IT development, education, healthcare, etc. India's trade with Solomon Islands though modest has been growing steadily in recent years and stood at US$70.39 million in 2015-16.
4.130. Solomon Islands is blessed with natural resources and we take this opportunity to appreciate the efforts of Solomon Islands for further strengthening and diversifying its economy. To conclude, we look forward to working with the authorities of Solomon Islands for further expanding our trade and investment ties for mutual benefit.
HONOURABLE MR. MILNER TOZAKA (HEAD OF DELEGATION)
4.131. On behalf of Solomon Islands, I would like, first of and foremost, to thank all the Members who have spoken this morning and provided comments and recommendations to our delegation. Please be assured that we will look upon these favourably, and we will respond to those directly posed to us, where possible, by Thursday.
4.132. May I also take the opportunity to acknowledge and thank Excellences, Representatives for the extension of sympathy on the earthquake that strikes Solomon Islands. At the end of this first TPR session, I am pleased to say that we are greatly encouraged by the words of support shown here today for Solomon Islands. We are a small country and our geographic isolation and limited productive capacity means we often operate on the margins. But, the encouragement demonstrated here today shows us that we are being taken seriously, and we strongly believe that our country, with the support of the international community, can contribute positively to the world economy.
4.133. Going forward, we need to work together to ensure that our trade and economic infrastructure is developed sustainably and promotes greater compliance with the multilateral rules
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5 REPLIES BY THE REPRESENTATIVE OF SOLOMON ISLANDS AND ADDITIONAL COMMENTS
5.1. I begin my closing remarks by thanking you, Chair, for the efficient manner in which you have conducted our Trade Policy Review proceedings. The leadership you have shown has enabled us to engage in fruitful and constructive discussions.
5.2. Further, I wish to express my sincere gratitude to Her Excellency Mrs. Dalia Kadišienė, Permanent Representative of Lithuania for accepting to be our discussant. Your diligent analysis and summation of Solomon Islands trade policy measures and indicators will prove particularly useful for us upon our return to capital.
5.3. Before I begin to address the topics that were brought to our attention, both in the advance written questions and during the first review session on Tuesday, allow me to acknowledge and extend our deep appreciation for the support that was pledged by those Members that took the floor on Tuesday and for commending Solomon Islands on its efforts to reform our trade policy regime. We acknowledge and praise your efforts to support us in our quest to reduce poverty and bring about sustainable growth through trade enhancing policies and reforms.
5.4. Particular mention goes to: Australia, Canada, Chinese Taipei, European Union, New Zealand, Thailand, United States, Vanuatu on behalf of Pacific WTO Members, Singapore, Brazil, Pakistan, Dominica on behalf of the OECS WTO Members, Japan, Republic of Korea, Fiji, Uganda, and India for their prior written questions and statements made during the first day's session. We thank those WTO Members who attended the first session of our TPR. Your presence is very much appreciated.
5.5. I must acknowledge that few of Solomon Islands' key development partners, are represented here today.
5.6. To Australia, as our largest development partner, Solomon Islands acknowledges and commends their consistent support efforts in the area of trade, particularly in customs, the PHAMA programme which helps to facilitate export market opportunities for local producers, support to Biosecurity Solomon Islands, support to implement the National Transport Fund to build Solomon Islands' infrastructure and support in the development of the Cruise shipping tourism industry. These are just some of the many programmes the Australian Government is involved in supporting throughout Solomon Islands.
5.7. To the EU, I acknowledge them as one of Solomon Islands' traditional development partners which continues to support the people of Solomon Islands through its rural development programme. This has seen large benefits across the majority of our population, in addition to the climate change adaption programme which aims to reduce the vulnerability of people and communities affected by climate change. The EU's Everything But Arms (EBA) initiative enables Solomon Islands fisheries to ably compete with much larger developing countries and continues to provide a significant source of income and employment in rural communities. Despite the current state of play in the EU-Pacific Economic Partnership Agreement (EPA) negotiations, Solomon Islands is committed to expanding its trade relations with the EU and will work with relevant agencies and partners to achieve this.
5.8. I must also commend the Japanese Government for their infrastructure support to Solomon Islands, namely the expansion of the wharf at Honiara Port and the upgrading of the main highway in Honiara, which is currently ongoing. In addition, Japan also continues to fund programmes that support and upgrade educational infrastructure in the country.
5.9. To the Korean Government, I thank them for their support to develop training programmes across key sectors, namely in fisheries science, food security and agricultural development, urban and regional development, maritime and aviation security and capacity building support in forestry resource management.
5.10. To the New Zealand Government, Solomon Islands acknowledges the support provided to the Ministry of Finance and Treasury's Inland Revenue division. The improvements to a number of domestic airports including ongoing work to upgrade the Munda Airport as the second international
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- 30 - airport will enhance tourism and economic growth opportunities across the provinces and the support to the fisheries sector.
5.11. I must also make a special commendation of our fellow WTO Members of the Melanesian sub-region of the Pacific, namely Fiji, Vanuatu and Papua New Guinea for the recent signing of the MSG Trade Agreement. This momentous occasion marks the further consolidation and deepening of our trade and economic, as well as social relations. We also like to extend our warm wishes to other WTO friends in the Pacific, namely Samoa and Tonga with which we augur to work under the PICTA and the currently negotiated PACER Plus which includes Australia and New Zealand.
5.12. May I finish off these words of thanks by adding that the list above is not an exhaustive one, neither does it list all the programmes for which our development partners are providing support. To all other development supporters of Solomon Islands, both in the past and present, we extend our utmost gratitude for your continued commitment and dedication to improving the lives of Solomon Islanders.
5.13. Allow me now to briefly respond to the specific concerns that were raised by Members on Tuesday, which can be read alongside the responses we provided to the advance questions. We also recognize that along with the issues identified below, there were others raised which will not be discussed today, but which my delegation fully takes note of.
5.14. On WTO notifications, we recognize that we still have a considerable amount of work to do to notify the WTO of our trade policies and practices, to enhance transparency and ensure greater compliance with the rules of the multilateral trading regime. Specifically on the TFA, Solomon Islands will endeavour to ratify the Agreement in 2017 and submit its Category B and C notifications. I must clarify that Solomon Islands did submit its customs valuation notification1, but unfortunately not in time for this TPR meeting.
5.15. Customary land ownership in Solomon Islands is a vital part of the culture and social framework of the economy. Solomon Islands understands the concerns that Members have raised on this issue and would like to assure those Members that land reform is a priority for the current Government, in keeping with our development objectives to create a better investment environment.
5.16. On the issues of an overreliance on the forestry and logging sector inter alia the evidence of illegal logging, the current Government is encouraging downstream processing, and moving away from a reliance on round log exports. Reforestation efforts are under way in order to counter the depletion of the resource, as well as measures to control and better manage the issuing of licenses for logging activities.
5.17. Solomon Islands, as outlined in the TPR reports and by Members' statements, is committed to seeing progress in the current ongoing fisheries subsidies negotiations at the WTO related to overfishing and IUU, given the negative environmental and economic impacts.
5.18. Members' recognition of the Solomon Islands' reliance on a small number of export products further emphasizes our need to diversify our product markets. Solomon Islands Government is currently identifying potential export products and markets, and attempting to address the principle constraints that have hindered participation by domestic producers to date. Harnessed with my Government's efforts to establish special economic zones, we hope to create a conducive environment for growth in the productive and manufacturing sector that will expand and diversify our product base.
5.19. On the issue of the 58 tariff lines that exceed their bound rates, Solomon Islands notes Members' concern on compliance with our commitments. The Solomon Islands Government will augur to address the issue of the non-compliant tariff lines in parallel with customs and tax reforms.
5.20. Tax reform has been highlighted as a priority area for the current Government, and efforts have already begun to address these issues. Given the extent of the reforms to be carried out,
1 G/VAL/N/1/SLB/1.
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Solomon Islands is facing a number of challenges identifying the technical capacity to undertake this task and as such, would fully appreciate the support of Members in order to achieve this goal.
5.21. Solomon Islands notes the concern raised by Members with regards to our ranking on the World Bank's Ease of Doing Business Index, as well as the general investment climate and decline in FDI inflows. As stated in the responses to the prior written questions, the decline in FDI can be attributed to a reduction in logging licenses, which we see as an important step towards combating deforestation and illegal logging. On the business environment, Solomon Islands has recently implemented a number of reforms in this area, set up an online business registry and facilitated greater ease of setting up and starting a business. These reforms, along with the pending investment policy, should better align our rank with the investment reality on the ground.
5.22. Solomon Islands also wishes to inform Members that efforts to fight corruption are well advanced with the Anti-Corruption Bill to be re-introduced in parliament, following further consultation, in early 2017.
5.23. A number of Members raised the issue of intellectual property rights and the Solomon Islands commitment to improving our participation in this area. We express our commitment to implementing the TRIPS Agreement and accession to WIPO, along with further efforts to strengthen policy and regulation in this area.
5.24. In recognition of the concerns raised by Members, in both the prior written questions and the statements made on the first day of our TPR meeting, Solomon Island wishes to assure that we will continue to work hard to meet the requirements as set out in the WTO Agreements. We note that whilst progress has been made over this review period, there is much room for improvement in time for the next review.
5.25. At this juncture, I must re-emphasize our call for support from our development partners to achieve the objectives as outlined in this review. Aid for trade initiatives, through the EIF for example, has provided considerable support to key sectors in our economy and there is still much that these programmes can achieve through the support of development partners. Solomon Islands look forward to receiving more information on the development assistance support to be provided under PACER Plus from Australia and New Zealand.
5.26. In closing, I take this opportunity to acknowledge and thank the hardworking team at the WTO Secretariat for their professionalism and producing the TPR report for Solomon Islands. The team, Mr. Arne Klau and Mr. Nelnan Koumtingue, travelled to the other side of the world, twice, in their commitment to produce a report that we are all very proud of. I thank the team for a job well done.
5.27. Finally, let me conclude by reiterating my delegation' sincere appreciation and thanks to you Madam Chair, and distinguished Members for your relentless support, valuable contributions and the encouragement shown to our team during this Trade Policy Review. Thank you for your attention.
DISCUSSANT
5.28. First of all, I wish to extend my warm thanks to Minister Tozaka and his team, to all the delegations which participated in this review, to you, Madam Chairperson, and, of course, to the Secretariat for hard work throughout this exercise.
5.29. Now, please allow me to share very briefly with you some of my observations from the first day of the TPR.
5.30. I am pleased to note that Members have commended the Solomon Islands Government on the efforts it has been making to implement what is necessary and important for the country's economic reforms and on progress on many issues since 2009. This great job has resulted in real and concrete achievements: solid economic growth, increase in per capita incomes, and significant fall in government debt.
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5.31. Countries have also recognized importance of the Solomon Islands' long term approach to its economic policy, and expressed hope that the National Development Strategy 2016–2035, the 2015 trade policy framework, the newly set-up National Trade Development Council and the National Strategy for the Economic Empowerment of Women and Girls will lead to greater economic inclusion and participation in the formal economy.
5.32. However, despite the sounder macroeconomic situation attained over the period under the review, it was commonly recognized by Members that some problems such as poverty, unemployment, corruption, low-levels of education remain as painful issues which need to be addressed by the Solomon Islands Government as a matter of urgency and priority. Also, Members expressed worries regarding recent declining trends in overall GDP and trade growth (with both exports and imports posting declines in each of the last three years); the over-reliance on logging exports. Countries emphasized the need for the better management of forests (treasure of the country) in order to avoid deforestation, which is a real threat under the current scale of logging activities and, in particular, the implied volumes of the illegal logging.
5.33. I believe that by signing and ratifying COP 21, Solomon Islands demonstrates its strong commitment to implement effective environmental measures, in particular, bearing in mind its own vulnerability to climate change.
5.34. While understanding geographical, political, economic and social challenges that Solomon Islands is confronting with, its limited financial and human resources, Members assume that there is a space to improve the general business climate, attract more foreign direct investment and diversify economic activity.
5.35. In addition, better compliance with the WTO rules (including notification requirements, commitments regarding applied tariffs rates which exceed the bound rates, etc.) was mentioned as a factor that would positively influence the economic environment of the Solomon Islands. Also, countries stressed the need for more action in the areas of competition policy, intellectual property rights, government procurement, transparency, TBT and SPS.
5.36. Speaking about the traditional sectors of the Solomon Islands economy (as agriculture or fisheries), it would be desirable to turn the efforts towards creation of more value added, and in tourism sector to concentrate more on unique features of the country. That would not only strengthen local productive capacities, but also favourably affect returns from the export.
5.37. In general, Members positively commented country's relatively open foreign trade regime. At the same time, they noted that more progress on improving the investment climate is needed, especially in addressing the land ownership issues. It is encouraging that Solomon Islands' Government recognizes that increasing foreign investment has a key role in achieving important goals, including diversification of the country's economy. Diversification of economy is identified by the Government as a top priority in order to overcome country's vulnerability to external shocks, improvement its business climate, enhance competitiveness.
5.38. I personally was impressed by the information provided by the Minister on the first day of TPR on the introduction of electronic business registration system, which I am sure will be very much conductive to the improvement of the investment climate in the country.
5.39. Members have congratulated Solomon Islands on improvements in the customs area. They praised moving to ASYCUDA World, establishment of the National Trade Facilitation Committee, also the notification of Category A commitments under the Trade Facilitation Agreement (TFA) and urged to speed up domestic procedures to ratify TFA as soon as possible, especially taking into account that only 8 more Members are needed to ratify before this Agreement enters into force. Early implementation of FTA will certainly benefit all Members, including Solomon Islands itself.
5.40. I am inclined to believe that the responses Minister Tozaka provided during this TPR responded to many concerns of the Members and reassured them that Solomon Islands will continue reforms already started aiming to achieve important long-term goals inscribed in countries National Development Strategy. Also, I believe, that country already now is considering its future vision when Solomon Islands will graduate from LDC status. And I wish constructive and creative solutions in this regard.
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5.41. In this context, it is necessary to mention that many Members, especially important trading and regional partners urged Solomon Islands to identify its needs for capacity building and indicated their good will to provide assistance needed.
5.42. Members welcomed the opening of Solomon Islands' Mission in Geneva, which definitely will facilitate country's active engagement in supporting of MTS. With MC11 approaching, I believe that Solomon Islands will contribute its part by active and constructive engagement in the process of preparation for the Conference, in shaping the contours of the package of possible outcomes of MC11 important not only to Solomon Islands and other LDCs, SVEs, small island nations, but to the entire membership of the WTO as well.
5.43. I am confident that these two days of hard work provided Solomon Islands delegation a unique opportunity to see and evaluate its policies from the other Members' perspectives. I wish Solomon Islands delegation to take a good note of these comments and use them as a reference in its future policy formulation and implementation.
5.44. Yes, there is still long way to go, but it is important to keep doing what you have started already, continue your important reforms, use advice and assistance, learn from good examples, especially of your regional partners.
5.45. Finishing, I would like to say that I was also very much encouraged by Minister's statement on the first day of TPR, especially by his Government's goal to make the Solomon Islands No. 1 investment destination in the Pacific, and as New Year is approaching and we all have some wishes I frankly wish the Minister to achieve this important goal may be not in 2017, but as soon as possible.
5.46. Finally, I wish Solomon Islands delegation a very safe trip back home.
BÉNIN AU NOM DU GROUPE DES PMA
5.47. La délégation du Bénin remercie la délégation des Îles Salomon pour les informations importantes qui nous ont été fournies sur les réalisations des Îles Salomon dans les domaines économique et commercial, y compris la réduction de la pauvreté et l'amélioration du pouvoir d'achat des populations, depuis le dernier examen de ses politiques commerciales en 2009.
5.48. Pays insulaire et moins avancé, les Îles Salomon ont entrepris des réformes économiques, budgétaires et commerciales qui ont produit des résultats positifs depuis 2009 avec une croissance positive évaluée à 2,9% en 2015. Les prévisions pour 2016 sont encourageantes, l'inflation restant contenue.
5.49. S'agissant du profil commercial des Îles Salomon, le Groupe des PMA voudrait souligner que l'économie des Îles Salomon est dominée par l'exploitation forestière et l'extraction minière, ainsi que la pêche et l'agriculture. En dépit de l'impact de l'appréciation du dollar des Îles Salomon sur les importations et les exportations qui a déséquilibré la balance commerciales du pays, la balance des paiements s'est nettement améliorée en 2015, signe que les Îles Salomon exercent une attraction positive sur les investissements directs étrangers.
5.50. Le Groupe des PMA se réjouit des efforts que les Îles Salomon déploient pour ajouter des résultats économiques et commerciaux significatifs à ceux qu'elles ont obtenus, à ce jour, dans la perspective de la sortie de la catégorie des PMA d'ici à 2018.
5.51. C'est pourquoi le Groupe des PMA invite les Partenaires nord-sud, sud-sud agissant aussi bien au titre de la coopération bilatérale, régionale et multilatérale à renforcer leur assistance aux efforts de développement des Îles Salomon en vue de l'atteinte de cet objectif et celui du développement durable inclusif.
EUROPEAN UNION
5.52. Let me first express our sincere appreciation to Solomon Islands' delegation for their timely replies that they have provided to our advance questions, as well as for the comprehensive presentation given on Tuesday and this morning.
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5.53. The EU is pleased to note that this review has been very useful for better understanding the trade policies of Solomon Islands and we hope that Solomon Islands will duly take into account some of the concerns and comments highlighted during this exercise, in particular with reference to the need to introduce lands policy reforms and to adopt anti-corruption legislation. And we have taken good note of the statement this morning in this regard.
5.54. The EU has submitted two follow-up questions to clarify further certain aspects of the Constituency Development Funds (CDF) regulations as well as of the land reform and we look forward to the replies in due course.
5.55. In conclusion, we would like to congratulate Solomon Islands for successfully concluding their TPR.
VANUATU
5.56. First, let me extend, on behalf of the Pacific Group, the appreciation of the group to the Honourable Minister for responding to the various questions that were posed to the delegation on the 13th of December. I also would like to thank Honourable Minister for the continuing commitment of Solomon Islands to the various trade agreements that bind the pacific countries together: the MSG Agreement, the Pacific Islands Countries Trade Agreement, and, of course, to seeing the conclusion of the PACER Plus agreement with Australia and New Zealand. All of which aim to closely integrate the Pacific region.
5.57. Solomon Islands is a very valuable member of the Pacific Group and, therefore we want to underscore the important role of the WTO and Aid for Trade in supporting the Solomon Islands moving forward the WTO in providing an open, stable, transparent and fair trading environment for small LDCs like the Solomon Islands. Therefore, the implementation of the WTO-LDC decisions, particularly on the enhanced rules of origin and the services waiver are really important for small countries like Solomon Islands who are trying to diversify their economy from being dependent on a few commodities as we have heard in the last two days.
5.58. Aid for trade has a role in addressing challenges and in translating the national trade policy objectives of the Solomon Islands' Government into tangible benefits on the ground. In this connection, the Pacific Group acknowledges the support already provided through the EIF and by the development partners to assist with the reforms that have already been undertaken and which are ongoing.
5.59. However, the Group notes with concern, as highlighted by the distinguished discussant, that the overseas development assistance to Solomon Islands is declining, as stated in the WTO report. The Pacific Group therefore would like to call on our development partners to provide the required assistance to enable Solomon Islands to advance the reforms that will improve the business environment, promote investment, and, more importantly, will strengthen the productive capacity, increase domestic production and diversify the economy.
5.60. Lastly, may I wish the Solomon Islands' delegation a very safe trip back to the region.
UNITED STATES
5.61. We sincerely thank the entire Solomon Islands delegation for your constructive participation in this TPR – we are now in the throes of preparation for our own TPR next week and appreciate the coordinated effort that goes into preparation for these Trade Policy Reviews and for composing the answers provided to our submitted questions. We also greatly value our Ambassador Kadisiene's insights as Discussant – and, as always, the cheerful and efficient Chair and experts in the Secretariat.
5.62. Just to highlight again some of the areas of concern from the point of view of the U.S. – and thank you to Minister Tozaka for addressing many of these issues this morning - we appreciate all the challenges faced and commend steps taken to strengthen the economic policy framework and economic growth. At the same time, we urge Solomon Islands to more proactively address diversification of the economy, intellectual property issues, illegal logging and reforestation, as well as missing notifications and land ownership issues. We'd also like to quickly express that we look
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- 35 - forward to Solomon Islands' ratification of the TFA, as we are optimistic that entry into force is within sight.
5.63. Finally, we look forward to your continued active engagement in the work of the WTO and increased future presence in Geneva. We wish you the best possible outcome with respect to disaster recovery, and safe travels to everyone returning to capital.
HONOURABLE MR. MILNER TOZAKA (HEAD OF DELEGATION)
5.64. I would just like to reiterate, on behalf of my delegation and on behalf of myself, how thankful I am to attend this TPR review which has been concluded today. I would like to say how thankful I am, Madam Chair, for all the help that you have given to the officials and to myself. I have been able to speak openly and to also listen to the many constructive comments and questions. That is encouraging for me as a Minister responsible for foreign affairs as well as trade. I am responsible for some of these very important trade-related agreements as Chair of the National Trade Development Council both in the country and in the region. What I have heard from our discussions here will really help me to be able to advise my Government and my Cabinet, particularly in those areas that you have highlighted. Areas where we are facing challenges, especially on land issues, on compliance, and on structure. The region came together and helped us to look good again. I am so grateful to the country that helped us, especially Australia, New Zealand and the Pacific region for the assistance they have been giving to us. I would like to thank you, Madam Chair, and also the discussant for all your comments, I have taken note of them and they are very useful for us. Thank you to all of you and for your wishes for us to travel back safely.
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6 CONCLUDING REMARKS BY THE CHAIRPERSON
6.1. This third Trade Policy Review of Solomon Islands has enabled us to better understand its trade and investment policies, as well as the challenges it faces. I would like to thank Minister TOZAKA and the rest of the delegation from Solomon Islands for their constructive engagement throughout this exercise. I would also like to thank again our discussant, Ambassador Dalia KADIŠIENĖ, for her substantive and pertinent remarks, and all those Members who had taken the floor to ask questions and offer comments.
6.2. At this TPR, Members were pleased to note that, notwithstanding the numerous challenges that Solomon Islands faced during the review period, it achieved sustained economic growth at rates between 2% and 10%, leading to an increase in per capita income; reduced poverty; and a significant fall in government debt. Members commended Solomon Islands for its many reforms and policy measures which aimed at supporting economic development and promoting sustainable and inclusive growth. These included reforms in public finance and the debt management framework, as well as monetary and exchange rate policies. Members also welcomed the adoption of the country's first Trade Policy Framework last year and the mainstreaming of trade policies into its National Development Strategy 2016-2035.
6.3. We understand that a key objective of that strategy is to diversify the source of economic growth and exports. Economic diversification is indeed important for Solomon Islands because it is a small island State dependent on only a few natural resources, mainly logging and fisheries. Regarding logging in particular, Members expressed concern about the impending depletion of Solomon Islands' forest resources, and urged the authorities to enhance its forestry management and combat illegal logging.
6.4. While noting its generally open foreign investment regime, Members hoped Solomon Islands could make further efforts to facilitate investment. Issues highlighted included the uncertainties in land ownership; corruption; and the lack of transparency in public administration. The representative of Solomon Islands assured Members that reforms had been carried out, and actions are in train, to address these issues and improve the business environment. Among other things, the Government has made commendable efforts in updating the Companies Act; setting up an electronic registry; launching a business registry website; and establishing a competition policy. As the Minister has informed us, we can also expect an anti-corruption bill to be re-introduced in the parliament early next year.
6.5. During this discussion, Members welcomed Solomon Islands' reforms in taxation and its adoption of public procurement legislation. They also welcomed its plans to reform the intellectual property regime, and hoped that it would become party to the World Intellectual Property Organization; sign on to relevant IP treaties; and establish a national IP office. Some Members urged Solomon Islands to undertake reforms in port infrastructure and services as well.
6.6. Regarding Solomon Islands' international trade policies, Members acknowledged the country's commitment to the multilateral trading system, and commended it for advancing the interests of least developed countries (LDCs) and small, vulnerable economies (SVEs) in the WTO, as well as its active participation in fisheries subsidies negotiations. Members praised Solomon Islands for having promptly notified its Category A commitments under the WTO Trade Facilitation Agreement, and looked forward to its early ratification of the Agreement. Some Members also encouraged Solomon Islands to participate in WTO plurilateral initiatives such as the Government Procurement Agreement and Information Technology Agreement. The country's participation in regional trade and economic cooperation, notably in the Pacific region, was also welcome.
6.7. One aspect of Solomon Islands' participation in the WTO which continued to attract Members' attention was its inability to comply with certain obligations under WTO Agreements. More specifically, Members were concerned about the persistent application of some MFN tariffs in excess of bound rates, and the discriminatory application of certain internal taxes. They also urged Solomon Islands to step up its efforts in submitting notifications to the WTO. Notwithstanding the scope for improvement in these areas, Solomon Islands was commended for its reforms in customs procedures and the enactment of legislation implementing the Customs Valuation Agreement. In this context, Members noted Solomon Islands' need for additional capacity and resources to institute improvements, and the important role that the WTO and Aid for Trade could
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- 37 - play in this regard. Taking the opportunity of this TPR, the representative of Solomon Islands called for a renewed commitment from the WTO membership to provide the country with technical assistance for capacity building.
6.8. In his statement just now, Minister Tozaka has responded comprehensively to major concerns raised by Members. Solomon Islands has also provided answers to all advance written questions raised by Members. This TPR will be successfully concluded once Solomon Islands has replied to all outstanding questions in a month's time. I believe Members will feel encouraged by the reforms undertaken and the future action plans outlined in Minister Tozaka's statements. I hope this discussion will encourage Solomon Islands to pursue policies which will allow the country to achieve sustainable growth and reduce poverty; you certainly have our support in this regard. We look forward to reviewing the trade policies of Solomon Islands as a country which has successfully graduated from LDC status at its next TPR.
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