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Pacific Island Countries Trade Agreement
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Pacific Island Countries Trade Agreement: 2001
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PICTA & PACER Frequently Asked Questions
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PICTA & PACER Frequently Asked Questions
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Negative List under the Melanesian Spearhead Group (MSG) Trade Agreement
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MSG Negative List
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Regional Trade Agreements

Melanesian Spearhead Group Trade Agreement (MSG)

The MSG is a free trade agreement between Fiji and Papua New Guinea, Vanuatu and Solomon Islands (New Caledonia joined as an observer.) Fiji joined the MSG Agreement (1993) in 1998 and is required to eliminate its tariffs within 9 years and since 2006, Fiji provides duty free to all goods originating from MSG countries except those that are expressly excluded in the Agreement. These include Chapter 22 - Beverages, Spirits and Vinegar, all products except items described in HS Tariff code 2201, 2202, and 2209; Chapter 24 - Tobacco and manufactured tobacco substitutes; Chapter 27 - Mineral fuels, mineral oils and products of their distillation; bituminous mineral waxes; and Cane sugar HS Code 1701.1100. The MSG Agreement was revised in October 2005 to adopt a negative list approach to liberalisation on trade in goods. The negative listing approach means that all products, except those on the negative list, are deemed to qualify for preferential tariffs. Fiji has no negative list. The Agreement has less onerous rules of origin (change in 4-digit HS classification) than PICTA. With MSG members being the larger of the Pacific Island countries, the majority of intra-regional trade in goods is conducted under MSG rather than PICTA.

MSG Trade Agreement is established to foster and accelerate economic development through trade relations and provide a political framework for regular consultations and review on the status of the Agreement, with a view to ensuring that trade, both in terms of exports and imports is undertaken in a genuine spirit of Melanesian Solidarity and is done on a Most Favored Nation (MFN) basis. Negotiations are held regularly between the members’ Leaders to consider the progress and development of the Agreement.

 

Pacific Islands Countries Trade Agreement (PICTA)


On the 18th August 2001, at the 32nd Pacific Islands Forum in Nauru, Forum Leaders endorsed and signed the Pacific Agreement on Closer Economic Relations (PACER) and the Pacific Island Countries Trade Agreement (PICTA) (a Free Trade Agreement amongst the 14 FICs).
 
Pacific Island Countries Trade Agreement (PICTA) establishes a free trade area in goods among the 14 FICs, and negotiations are currently underway for the broadening of PICTA to include trade in services (TIS) and temporary movement of natural persons (TMNP). ; PICTA came into effect on 13 April 2003 and aims to establish a free-trade area between all fourteen Forum Island Countries. After entry into force, countries commit to remove tariffs on most originating goods by 2021. . Fiji – is one of the first FICs to show its solid commitment and support for the building of regional integration through trade. By establishing a free trade area among the FICs, PICTA will encourage specialization and greater efficiency in the economies involved.

 Currently PICTA covers only trade in goods between its members. FICs can increase their exports to other FICs of products in which they can be competitive, and, in turn, increase their imports of goods that are being produced competitively by other FICs. The resulting increase in trade will reflect enhanced efficiency and improved consumer welfare in the FIC economies, and will hopefully contribute to the overall creation of jobs. The creation of a regional market should also encourage increased investment in FICs. Many FICs currently struggle to attract investment, mainly because of the size of their domestic markets. However, the opportunity for goods manufactured in the FICs to reach the regional market of 10 million people, tariff- and quota-free, may attract more investors, including from Australia, who hitherto may have been hesitant to engage FICs individually. PICTA provides for the progressive phasing out of tariffs on trade of originating goods among the FICs. Tariff for originating goods of developing FICs will be reduced to zero by 2015, and by 2017 for small island sates and least developed countries, except in case of ‘excepted imports ’ (the ‘negative list’) for which tariffs are to be reduced to zero by 2020 and 2021 respectively..

PICTA aims to: strengthen, expand and diversify trade between the parties;  promote and facilitate  expansion and diversification through the elimination of tariff and non-tariff barriers to trade between the parties in gradual and progressive manner, under an agreed timetable,  with a minimum of disruption; Develop trade between the parties under conditions of fair competition; Promote and facilitate commercial industrial, agricultural and technical co-operation between the parties; and  development and use of the resources of the Pacific Region with a view to the eventual creation of a single regional market among the Pacific Island economies in accordance with the respective social and economic objectives of the parties, including the advancement of indigenous people, contributing to the harmonious development and expansion of world trade in goods and services and to the progressive removal of barriers to trade
 
PICTA does not affect rights and obligations under existing agreements. Thus the FICs rights and obligations under existing agreement will remain in force:

South Pacific Regional Trade & Economic Coopertaion Agreement (SPARTECA)  


SPARTECA is a non-reciprocal free trade agreement between the FICs and Australia and New Zealand. It came into effect in 1981 and provides duty-free access to all products from the FICs . The general rules of origin under SPARTECA are very complex and onerous and the FICs want these rules to be reviewed to improve market access to Australia and New Zealand.   
 
 

The Pacific Agreement on Closer Economic Relations (PACER)


PACER was signed in August 2001, and entered into force in October 2002. It is not a free trade agreement but a framework ("umbrella") agreement for cooperation on trade and economic integration between the 14 FICs and Australia and New Zealand, with a view towards the development of a single regional market. It also provides assistance to FICs through the Regional Trade Facilitation Programme (RTFP), which is aimed at addressing customs issues, standards and conformance and quarantine issues. PACER envisages the negotiation of Forum-wide trade arrangements eight years after PICTA enters into force (2011) or earlier when the FICs enter into a free trade agreement with any developed country or any country with gross domestic product that is higher than that of New Zealand.

PACER Plus


The Forum Leaders in 2009 agreed that PACER Plus negotiations commence forthwith and welcomed the decision by Trade Ministers to establish the Office of the Chief Trade Adviser (OCTA) to assist FICs on PACER Plus matters. The Forum Trade Ministers met in October 2009 and agreed that Members would focus on undertaking meetings on PACER Plus matters at Officials level. The common priority issues for discussions include, but not limited to Rules of Origin; Regional Labour Mobility (beyond mode 4); Development Assistance, focusing on physical infrastructure for trade, trade development and promotion; and Trade Facilitation, including sanitary and phytosanitary measures, technical barriers to trade, standards and customs procedures. Members also identified the following issues for discussion: Services, including health, education, telecommunications, shipping and aviation; Investment; Economic Cooperation; and Environment including renewable energy. To date, four PACER Plus Officials meetings have been undertaken. Two Non-State Actors (NSAs) Dialogue, which is engaging with NSAs on PACER Plus has been held in the margins of the PACER Plus meeting. The first dialogue was held in the Solomon Islands in October 2010 and Second NSA dialogue was held in March 2012 in Australia