72586 v1 World Trade Indicators 2009/10 Fiji Trade Brief Trade Policy the 27 percent duty band to 32 percent to stimulate domestic industries.3 According to the World Trade Organization, Fiji has been steadily increasing its applied tariffs for the past several years. Further increases are expected in 2009, External Environment due to the tariff increases proposed in the 2009 The simple average of the rest of the world tariff faced Budget.1 Tariffs remain Fiji’s main trade policy by Fiji’s exports is 10.2 percent. When taking into instrument and are a considerable portion of account the volume of exports it is 23.1 percent. The government revenue. The simple average of the MFN rates for agricultural goods and non-agricultural goods applied tariff rate in 2008 was 12.1 percent, slightly are very different, at 38.6 and 6.9 percent, respectively. higher than the average of 9.3 percent for the East In 2008, the real effective exchange rate of the Fiji Asia and Pacific (EAP) region. Based on the MFN dollar appreciated by 3 percent, making exports less applied tariff, Fiji ranks 134th out of 181 countries competitive. But, in the wake of the financial crisis, the (where 1st is least restrictive). Fiji’s trade policy is currency was devalued by 20 percent (the approximate designed to protect its domestic agriculture and amount of the total appreciation since 2008) in April fisheries producers by placing a high tariff on 2009.4 agricultural goods of 27.2 percent, compared with 9.9 percent for non-agricultural goods. Fiji’s maximum In July 2009, an interim Economic Partnership tariff on all goods (excluding alcohol and tobacco) is Agreement with the European Community went into 507.5 percent. In 2008 this top tariff was levied on effect, which opened up the European market to many imports of motor vehicle parts. The trade policy space, goods from Fiji, most notably fishery products.5 In as measured by the wedge between bound and applied May 2009, the leading sugar company established a tariffs (the overhang), has shrunk slightly since 2006, preferential import status for all sugar exports to the now standing at 24.2 percent. Regarding the extent of EU.6 Fiji has ratified the Pacific Island Countries its commitment to trade liberalization in services, Fiji Trade Agreements (PICTA), together with 10 other ranked 144th out of 148 countries according to the countries out of 14 members of the Pacific Islands GATS Commitment Index. Forum (the Forum Island Countries) that signed it in 2001.7 PICTA, an agreement for free trade in goods, In response to rising food prices, the government and, in future, services, falls under the broader Pacific removed import tariffs on basic food items such as Agreement on Closer Economic Relations (PACER) rice, edible oil, and tinned fish in June of 2008. These that in addition to the Pacific Island Countries also reductions are expected to be extended through 2009. includes Australia and New Zealand.8 In August 2009, A number of measures were also undertaken to ease leaders of the Pacific Island Forum agreed to start the burden on the fishing industry, including an negotiating PACER plus, an FTA that would include elimination of tariffs on fuel.2 In 2009, the Australia and New Zealand as well as the Forum government plans to raise the duty on all items under Island Countries and that would cover goods, services, and investment.9 Unless otherwise indicated, all data are as of August 2009 Behind the Border Constraints and are drawn from the World Trade Indicators 2009/10 Database. The database, Country Trade Briefs and Fiji remained in the top 30 percent of international Trade-at-a-Glance Tables, are available at business environments in 2009, being ranked 54th out http://www.worldbank.org/wti. of 183 countries, in the Ease of Doing Business index. With a relatively high number of required documents If using information from this brief, please provide the and long times to export and import, the country does following source citation: World Bank. 2010. “Fiji Trade not rank highly (116th out of 183) in the Trading Brief.� World Trade Indicators 2009/10: Country Trade Briefs. Across Borders subcategory of the index, which looks Washington, DC: World Bank. Available at at the extent of trade facilitation in the country. http://www.worldbank.org/wti. World Trade Indicators 2009/10 Fiji Trade Brief However, the cost to export and import per container 2. Ministry of Finance and National Planning, November is lower than the regional average. 21, 2008, pp. 23–24. 3. Ministry of Finance and National Planning, 2008, p. 53. Trade Outcomes 4. Fiji Times, 2009. Fiji’s very low growth rate of total trade in goods and 5. Bilaterals.org, December 2008. services during the 2005–07 period of 0.9 percent rose 6. Bilaterals.org, May 2009. in 2008, when total trade grew by an estimated 9.8 7. Bilaterals.org, April 2009. percent in real (constant 2000 U.S. dollars) terms. Real 8. Pacific Islands Forum Secretariat and Jane Kelsey. export growth was 7.5 percent, after having fallen in April 2004, p. 18. 2007. Real imports grew by an estimated 12 percent, 9. Pacific Islands Forum Secretariat. August 2009. after a fall of 5.6 percent in 2007. Expectations are 10. Fiji Islands Bureau of Statistics. 2009. that exports and imports will fall in 2009 by an 11. Sada Reedy. August 14, 2009. estimated 4.2 and 3.5 percent, respectively. The total 12. Fiji Islands Bureau of Statistics, 2009. trade share for Fiji rose in 2008 to 177 percent, although it is expected to drop by 43 percentage points in 2009. References In nominal U.S. dollar terms, total trade grew by an Bilaterals.org. December 2008. “EU-Pacific Interim estimated 13.8 percent in 2008, which was less than FTA.� July 8, 2009 . slowdown has decreased demand for Fiji’s main ———. April 2009. “PACER & PICTA.� Bilaterals.org. exports, including the top two exports of sugar and June 29, 2009 . respectively, of total exports in 2008.10 Other top ———. May 2009. “$1bn Deal.� July 8, 2009 exports include mineral water and garments, which . respectively. Despite the decline in the top two Fiji Islands Bureau of Statistics. 2009. “Overseas exports, total exports increased by an estimated 14.3 Merchandise Trade.� . services exports, which grew by an estimated 15.7 Fiji Times. April 15, 2009. “20 Percent Devaluation: percent. However, tourism, which accounts for 24 RBF.� August 4, 2009 . global recession and is expected to fall further, leading Kelsey, Jane. April 2004. “Big Brothers Behaving Badly: to decreases in service exports. In 2009, exports are The Implications for the Pacific Islands of the expected to decline by 6.6 percent. In the first five Pacific Agreement on Closer Economic Relations months of 2009, total exports fell by 33.8 percent in (PACER).� Pacific Network on Globalisation nominal U.S. dollar terms over the same period in (PANG). . 3.9 percent, respectively, over the same period.12 Ministry of Finance and National Planning. November Increased commodity prices during 2008 led to 21, 2008. “2009 Budget Address.� July 1, 2009. increases in the prices of imports, which caused imports grew by an estimated 13.6 percent, which is ———. 2008. “Economic and Fiscal Update: reflected in the increase in imports of goods of an Supplement to the 2009 Budget Address.� July 1, estimated 12.8 percent, while services increased by an 2009. . to fall by 14.6 percent. Pacific Islands Forum Secretariat. “Regional Trade.� September 10, 2009. . Notes ———. August 2009. “Fortieth Pacific Islands Forum: 1. World Trade Organization, 2009. Forum Communique.� September 10, 2009. . %20140809.pdf>. Reedy, Sada. August 14, 2009. “Presentation to the Fiji World Bank. April 2009. East Asia And Pacific Update: Tousim Forum 2009: National Economic Update Battling the Forces of Global Recession. Washington, DC: and a Pat to Sustainable Tourism Growth.� Reserve The World Bank Group. Bank of Fiji. September 11, 2009. World Trade Organization. June 25, 2009. Trade Policy