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Vanuatu Trade Brief World Trade Indicators 2009/10 Vanuatu Trade Brief Trade Policy implemented in 2012), after which copra exports to Public Disclosure Authorized the EU and tuna and beef exports to Japan would be Although Vanuatu is a participant in the Integrated subject to tariffs.2 In March 2009, the country was Framework Initiative, a program designed to help found eligible but not recommended for graduation by countries implement trade reforms, it still has one of the UN’s Department of Economic and Social Affairs the most restrictive trade regimes in the East Asia and but will be reviewed again in 2012.3 Pacific (EAP) region. The simple average of the MFN applied tariff rate has increased since 2002 to 16.1 Vanuatu is not a member of the WTO, but does percent in 2008. This is higher than the average for maintain a status as an observer government. It has both the EAP region and lower-middle-income ratified the Pacific Island Countries Trade Agreements countries, which are 9.3 and 11.4 percent respectively. (PICTA), together with 10 other countries out of 14 Agricultural goods, on which the economy is very members of the Pacific Islands Forum (the Forum dependent, are given higher tariff protection of 32 Island Countries) that signed it in 2001.4 PICTA, an percent compared with 13.8 percent for non- agreement for free trade in goods, and, in future, agricultural goods. Based on the latest MFN applied services, falls under the broader Pacific Agreement on Public Disclosure Authorized tariff, it ranks 157th out of 181 countries (where 1st is Closer Economic Relations (PACER) that in addition least restrictive). Since 2006 Vanuatu has had a to the Pacific Island Countries also includes Australia maximum tariff on all goods (excluding alcohol and and New Zealand.5 In August 2009, leaders of the tobacco) of 250 percent. As of 2007, this restrictive Pacific Island Forum have agreed to start negotiating tariff was levied on different varieties of firearms. PACER plus, a free trade agreement that would include Australia and New Zealand as well as the Forum Island Countries and that would cover goods, External Environment services, and investment.6 The EU is currently The simple average of the rest of the world tariff faced negotiating a comprehensive regional Economic by Vanuatu’s exports is 10.1 percent. When taking into Partnership Agreement (EPA) with all 14 signatories account the level of exports it is 3.9 percent, with the of PICTA. In the meantime, Vanuatu continues to rate for non-agricultural goods slightly higher than for benefit from the “Everything But Arms” (EBA) agricultural goods. Over the course of 2008, the initiative under which its exports have duty-free and Public Disclosure Authorized Vanuatu vatu, the national currency, appreciated by quota-free access to the EU market. 1.1 percent against the U.S. dollar, making exports slightly more expensive.1 Considered a least developed Behind the Border Constraints country (LDC) by the UN, Vanuatu benefits from preferential tariff rates from a number of trading In terms of the conduciveness of its institutional partners, including its largest, Japan. The country was environment to business, Vanatu ranked 59th out of up for review to determine whether it would be 183 countries in the 2010 Ease of Doing Business graduated from its LDC status in 2009 (to be index. With relatively high cost per container and long times to export and import, the country does not rank highly (141st out of 183) in the Trading Across Borders Unless otherwise indicated, all data are as of August 2009 subcategory of the index, which looks at the extent of and are drawn from the World Trade Indicators 2009/10 trade facilitation in the country. The number of Database. The database, Country Trade Briefs and required documents to export and import into and out of the country are comparable to the regional averages. Trade-at-a-Glance Tables, are available at Public Disclosure Authorized http://www.worldbank.org/wti. If using information from this brief, please provide the Trade Outcomes following source citation: World Bank. 2010. “Vanuatu Vanuatu’s high growth rate of total trade in goods and Trade Brief.” World Trade Indicators 2009/10: Country Trade services during 2007 of 10.3 percent did not continue Briefs. Washington, DC: World Bank. Available at during 2008, when total trade grew by an estimated 1.9 http://www.worldbank.org/wti. World Trade Indicators 2009/10 Vanuatu Trade Brief percent in real (constant 2000 U.S. dollars) terms. Real References export growth was dramatically lower, at an estimated 1.1 percent, only a tenth of its value in 2007. Real Bilaterals.org. April 2009. “PACER & PICTA.” import growth fell by three-quarters to an estimated Bilaterals.org. June 29, 2009. <http://www.bilaterals. 2.5 percent in 2008. Expectations are that exports and org/rubrique.php3?id_rubrique=86>. imports will fall in 2009 by 6.2 and 5 percent, Department of Economic and Social Affairs. February respectively. 2009. “Ex-Ante Impact Assessment of Likely Consequences of Graduation of the Republic of In nominal terms, total trade grew by an estimated 12 Vanuatu from the Least Developed Country Category.” percent in 2008, which was a slight decrease over United Nations, New York, NY. July 1, 2009. 2007. Vanuatu is primarily an agricultural economy, <http://www.un.org/esa/policy/devplan/profile/ with 80 percent of the population working in the ia_vanuatu.pdf>. 7 agricultural sector. Copra is the largest export, ———. March 2009. “Committee for Development comprising 35 percent of all exports, but timber, beef, Policy Report on the Eleventh Session.” United and cocoa are also important crops. Total exports Nations, New York. July 1, 2009. <http://www. increased by an estimated 8.1 percent in 2008, partially un.org/esa/policy/devplan/e200933.pdf>. due to rising prices of top exports. A slowdown in the Economic and Social Commission for Asia and the growth in demand for tourism was evident from the Pacific. May 2008. E-TISNET Monthly News. United change in exports of services, which grew by an Nations. July 2, 2009. estimated 7.6 percent, just over a quarter of its growth <http://www.unescap.org/tid/tisnet/ rate in 2007. Major export destinations for Vanuatu news508.pdf>. are the EU, India, and Australia, which are expected to experience significant slowdowns in growth in 2009. International Monetary Fund (IMF). 2009. International As a result, double-digit decreases in goods exports are Financial Statistics. IMF, Washington, DC. expected to lead to a decrease in total exports of 9.1 Kelsey, Jane. April 2004. “Big Brothers Behaving Badly: percent in 2009. The global economic downturn, The Implications for the Pacific Islands of the especially that of Australia (accounting for over half of Pacific Agreement on Closer Economic Relations all Vanuatu tourists), was expected to negatively affect (PACER).” Pacific Network on Globalisation tourism revenue, which accounts for 20 percent of (PANG). <http://www.pang.org.fj/doc/040401big Vanuatu’s GDP.8 However, in the first three months brothersjanekelsey.pdf>. of the year, tourism arrivals were up by 33 percent Pacific Islands Forum Secretariat. “Regional Trade.” over the same period in 2008.9 Total imports grew by September 10, 2009. <http://www.forumsec.org.fj/ an estimated 15.5 percent in 2008, due to increases in pages.cfm/economic-growth/regional-trade/>. commodities prices. In 2009, imports are expected to ———. August 2009. “Fortieth Pacific Islands Forum: fall by 13.6 percent. Foreign direct investment as a Forum Communique.” September 10, 2009. share of GDP was 6.7 percent in 2007. <http://www.forumsec.org.fj/pages.cfm/newsroom/ press-statements/2009/final-communique-of-40th- Notes pacific-islands-forum-cairns.html>. Reserve Bank of Vanuatu. March 2009. Quarterly Economic 1. IMF, 2009. Review. September 11, 2009. <http://www.rbv. 2. Department of Economic and Social Affairs, February gov.vu/Publications/quaterly/2009/Quarterly%20 2009, pp. 17 Economic%20Review%20March%202009.pdf>. 3. Department of Economic and Social Affairs, March U.S. Department of State: Bureau of East Asian and 2009, pp. iv. Pacific Affairs. March 2009. “Background Note: 4. Bilaterals.org, April 2009. Vanuatu.” June 26, 2009 <http://www.state.gov/r/ 5. Pacific Islands Forum Secretariat and Jane Kelsey, pa/ei/bgn/2815.htm>. April 2004, p. 18. Vanuatu National Statistics Office. 2009. “Tourism 6. Pacific Islands Forum Secretariat, August 2009. and Migration—April 2009.” <http://www.spc.int/ 7. U.S. Department of State, 2009. prism/Country/VU/stats/P_releases/Monthly/ 8. U.S. Department of State, 2009. Tourism/Apr09.pdf>. 9. Reserve Bank of Vanuatu, March 2009, p. 14. .
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