WT/TPR/M/378 6 February 2019 (19-0657) Page: 1/32 Trade Policy Review Body 23 and 25 October 2018 TRADE POLICY REVIEW VANUATU MINUTES OF THE MEETING Chairperson: H.E. Mr Eloi Laourou (Benin) CONTENTS 1 INTRODUCTORY REMARKS BY THE CHAIRPERSON ....................................................... 2 2 OPENING STATEMENT BY THE REPRESENTATIVE OF VANUATU .................................... 4 3 STATEMENT BY THE DISCUSSANT ................................................................................ 8 4 STATEMENTS BY MEMBERS ........................................................................................ 11 5 REPLIES BY THE REPRESENTATIVE OF VANUATU AND ADDITIONAL COMMENTS ....... 25 6 CONCLUDING REMARKS BY THE CHAIRPERSON ......................................................... 31 Note: Advance written questions and additional questions by WTO Members, and the replies provided by Vanuatu are reproduced in document WT/TPR/M/378/Add.1 and will be available online at http://www.wto.org/english/tratop_e/tpr_e/tp_rep_e.htm. WT/TPR/M/378 • Vanuatu - 2 - 1 INTRODUCTORY REMARKS BY THE CHAIRPERSON 1.1. The first Trade Policy Review of Vanuatu was held on 23 and 25 October 2018. The Chairperson, H.E. Mr Eloi Laourou (Benin), welcomed the delegation of Vanuatu headed by Mrs. Roline Tekon, Acting Director General Ministry of Foreign Affairs, International Cooperation and External Trade; the rest of the delegation; and the discussant, H.E. Ambassador Sheryl K. Spencer (Jamaica). 1.2. The Chairperson recalled the purpose of trade policy reviews and the main elements of procedures for the meeting. The report by Vanuatu was contained in document WT/TPR/G/378, and that of the WTO Secretariat in document WT/TPR/S/378. 1.3. Questions by the following delegations had been submitted in writing before the deadline: Brazil; Chinese Taipei; New Zealand; European Union; United States; Canada; Japan; and Argentina. The following delegations submitted written questions after the deadline: Australia; Korea, Rep. of; and China. 1.4. Since its accession, Vanuatu's economy had witnessed considerable fluctuations. On the one hand, it had performed reasonably well on average, with an annual GDP growth rate of around 2.3% and low inflation rates. On the other hand, large parts of the country had been devastated by Category 5 Cyclone Pam in 2015, bringing the year's growth to zero. Hence Vanuatu's vulnerability to natural disasters and the weakness of its infrastructure were some of the most important challenges it faced in achieving higher economic growth and attracting more investment. 1.5. Vanuatu's GDP per capita was now some US$2,900, and its graduation from LDC status was expected in a few years. Agriculture played a key role in Vanuatu's economy, with around 80% of the population depending on subsistence farming. The agriculture sector accounted for over 20% of GDP and virtually all merchandise exports. The services sector accounted for about two thirds of Vanuatu's GDP, whereas the industrial sector, in the absence of a strong manufacturing base, mainly consisted of construction and utilities. 1.6. Trade was very important for Vanuatu's economy, with the combined value of exports and imports exceeding 100% of GDP. Cattle and logs were the main merchandise exports, while manufactured goods, food products and live animals were the main import items. In services trade, which was in surplus, tourism was by far the most important generator of foreign exchange. 1.7. Against this background, it was not surprising that trade issues figured prominently in Vanuatu's policy objectives. Vision 2030, which laid down Vanuatu's long-term development goals, aimed to achieve stability, sustainability and prosperity by 2030 through increasing trade and investment opportunities and reducing barriers, increasing access to markets for exports, requiring all new trade agreements to demonstrate tangible benefits in the national interest, and stimulating economic diversification. Vanuatu's Trade Policy Framework, which had been prepared in 2012 and was currently being updated, had the objectives of mainstreaming trade into its national development strategy, and enhancing development through increased exports of goods and services. 1.8. While Vanuatu granted at least MFN treatment to all its trading partners, it was party to several overlapping regional agreements, all of which were in the South Pacific, namely the Melanesian Spearhead Group, the Pacific Island Countries Trade Agreement (PICTA), and the Pacific Agreement on Closer Economic Relations (PACER). 1.9. With regard to trade policy, the tariff was Vanuatu's main trade policy instrument. Vanuatu's average applied MFN tariff in 2018 was 9.3%. All but two tariff lines were ad valorem, and 26% of tariff lines were duty-free. For three tariff lines, applied rates exceeded bound rates. Although a law on trade contingency measures had been enacted in 2013, no such measures had yet been taken. Import prohibitions applied to various agricultural products, while alcoholic beverages, certain drugs and foods were subject to import licensing. During the period under review, Vanuatu adopted legislation to give effect to the WTO Agreement on Customs Valuation and also significantly reduced customs clearance times. While Vanuatu had not yet ratified the Trade Facilitation Agreement, it had notified its Category A, B, and C commitments to the WTO. 1.10. Vanuatu was open to foreign investment, which was actively encouraged through the Vanuatu Investment Promotion Authority. For some activities, such as tourism or retail shops, the operation WT/TPR/M/378 • Vanuatu - 3 - had to meet minimum thresholds specified in the relevant legislation. A few other activities were reserved for Vanuatu citizens, these included exporting sandalwood and kava; manufacturing handcrafts; and road transport. 1.11. The Chairperson drew Members' attention to areas, among others, where they were interested in having more clarity. These included: trade facilitation and ratification of the Trade Facilitation Agreement; notifications; protection of intellectual property rights; risk management for imports; import prohibitions and licensing; transport services; and support to the agriculture sector. 1.12. This meeting was a good opportunity for Members to discuss in greater detail issues of interest to them and of systemic importance to the multilateral trading system. The Chairperson looked forward to a fruitful exchange. WT/TPR/M/378 • Vanuatu - 4 - 2 OPENING STATEMENT BY THE REPRESENTATIVE OF VANUATU (MRS. ROLINE TEKON) 2.1. Mr. Chairman, Good morning and thank you for giving me the opportunity to take the floor. 2.2. Mr Chairman, I bring warm greetings from the Government and the people of Vanuatu to you, the distinguished WTO Members, the Director General of the WTO, the Staff of the WTO Secretariat, the WTO Technical Assistance Facilitator, donors and observers. 2.3. Let me convey the apologies of the Minister of Foreign Affairs, International Cooperation and External Trade Hon. Ralph Regenvanu who is not able to be present today due to unforeseen circumstances. It is therefore with great honour that I present this opening statement of the first Vanuatu Trade Policy Review (TPR) on behalf of the Government of the Republic of Vanuatu. I also wish to register at this juncture, our deepest appreciation for the understanding of the membership on the delays of our submissions. 2.4. Chair, my statement will focus on two main themes. Firstly, the Vanuatu's national trade policy and its implementation and, secondly, our responses to some of the issues in the WTO Secretariat's reports. 2.5. Briefly by way of background, the Republic of Vanuatu is an Island State located in the South Pacific Ocean. It consists of 83 volcanic islands with the population of approximately 270,000 people. 80% of the population live in rural areas where subsistence farming, fishing and production of cash crops such as kava, coconut and cocoa are the main sources of their livelihood. 2.6. Chair, Vanuatu became the 157th WTO Member on the 24th of August 2012, and it is our conviction that this first Trade Policy Review exercise would give us the opportunity to show the world the progress in implementing its trade policies, implementation measures and practices. This exercise also allows the Government to reassess its policies and implementation plans. Vanuatu expresses its commitment to the Multilateral rules-based system of the WTO which provides predictability and certainty for all WTO Member in particular the small and vulnerable Members like Vanuatu. 2.7. Vanuatu values the importance of the trade policy review and reiterate its commitments to the transparency mechanism of the WTO. We remain committed to the monitoring and evaluation of our engagement and consequently carryout further reforms to strengthen our trading regime and obligations. 2.8. This TPR also comes at an important time as Vanuatu prepares for graduation from its LDC status in 2020. The loss of trade preferences and other important privileges will need to be taken into account in the national development strategies and trade policies. 2.9. Vanuatu's national development strategy, Vision 2030, commonly known as the People's Plan, sets out the Government's vision and priorities aimed at achieving stability, sustainability and prosperity. To achieve this Vision, the Government is committing itself to increase trade and investment opportunities, reduce barriers to trade and investment, stimulate economic diversification,