The latest WTO Trade Policy Review (TPR) for Fiji seeks to situate the agricultural sector within the national economy and society and explores the agriculture-related trade policy and trade policy instruments used in Fiji.

The TPR notes that the agricultural sector contributes 9.8% of GDP but is ‘vital for subsistence livelihoods, especially in rural areas, where some 50% of Fijians live’. The Fijian government sees agriculture as ‘fundamental to reviving the economy and promoting food security through self-sufficiency (e.g. in rice and milk)’. In this context, tariffs are ‘used selectively to protect industries’, often in association with sector-specific import-licensing arrangements (e.g. in the sugar sector).

Import substitution policies include ‘relatively moderate to high tariffs on foodstuffs’. Fiji also has extensive price controls on food items and several statutory agricultural marketing arrangements, which have generated considerable public debt (the sugar sector being a case in point). The WTO report highlights the extent to which EU sugar sector reform has in recent year thrown into focus the challenges facing the Fijian sugar sector: see Agritrade article ‘ WTO Trade Policy Review assessment of Fijian sugar sector’ below.

The government of Fiji favours flexibility in any agricultural liberalisation process in order to accommodate ‘capacity constraints and vulnerability as well as policy goals and development needs’. The Fijian government favours the use of infant industry protection measures with no binding of tariffs in these products. Agricultural trade is nevertheless seen as ‘a key factor in achieving higher incomes and sustainable development’. Under the 2010 Revised Budget announced on 2 July 2010, efforts will be directed at raising exports, increasing food security by growing more local foods and in the process reducing imports.

In terms of the use of trade policy tools in the agricultural sector, the WTO trade policy review notes that tariffs remain ‘the principal trade policy instrument and an important source of tax revenue’. ‘Fiji has bound almost 50% of its tariff lines, mainly in agriculture’, with the applied MFN tariff being ‘well below bound rates’. As a result of this, Fiji’s ‘applied MFN tariff rates have continuously edged upward’ for agricultural products, from 12% to 12.7% between 2003 and 2008.

The report notes that ‘Trade reforms are seen as integral to Fiji's economic priorities of developing an efficient, and therefore competitive, open economy to promote export-led growth.’ The Fijian government reportedly believes that ‘switching from a consumption-driven to an export-driven economy requires removing well-established interventions, such as tariffs and other forms of protection, tax and customs exemptions, and incentives.’ However the government takes the view that any reforms must be a gradual process, due to the importance of trade taxes to government revenues. In addition, the need to structurally reform certain vulnerable industries is recognised. These reforms are constrained further by the impact of the global economic crisis.

Fiji is expanding its network of bilateral and regional agreements. The WTO Secretariat takes a sceptical view of the economic benefits of discriminatory trade liberalisation, compared to unilateral non-discriminatory liberalisation. However notes the Fijian government’s concern that any liberalisation commitments made in an EPA context could spill over into the PACER context, with the revenue implications being far more profound than those arising from the EPA as such. This concern is shared by other PACP states and is demonstrated by the sluggish atmosphere currently surrounding the EPA negotiations and the determination to slow down the PACER Plus process.

The report argues that WTO members can help Fiji to improve its economic development prospects by ‘alleviating unduly restrictive non-tariff barriers (e.g. sanitary and phytosanitary measures) and by adapting planned measures in favour of least developed countries so as to ‘minimise the adverse impact on Fiji's trade patterns of their more generous preferential access to exports from least developed countries’.