RESTRICTED
WORLD TRADE WT/ACC/SPEC/VUT/1
10July1996
ORGANIZATION(96-2699)
Original: English
ACCESSION OFVANUATU
Communication from Vanuatu
Thefollowing communication hasbeenreceived fromthePermanent Mission ofVanuatu with
therequest thatitbecirculated forinformation toMembers oftheWorking Party.
_______________
General statement byHon. SelaMolisa,
Minister forIndustries, Trade andCommerce
ontheoccasion ofthefirstformal meeting
oftheWorking Party ontheAccession ofVanuatu
totheWorld Trade Organization
Geneva, 03July1996
Statement
- Madame Chairperson;
- distinguished members oftheWorking Party;
- officials oftheWorld Trade Organization;
- ladies andgentlemen.
Thank youforaffording meandmydelegation thisopportunity tobeabletoundertake this
firstimportant consultation withtheWorking Party under thechairmanship ofMadame Syahruddin,
thedistinguished Ambassador ofIndonesia, whohasdoneamarvellous taskinfacilitating theRepublic
ofVanuatu 'srequest foraccession tothisparticular stage.
Also totheother distinguished members oftheWorking Party, Iextend toyouallmy
Government 'sheartfelt support andgratitude forthepainstaking effort youhaveallputtogether in
thisrather laborious exercise.
Madame Chairperson,
theRepublic ofVanuatu isaverysmall country located inthecenter ofthewidePacific Ocean,
distant from itsmain markets.
In1994 thepopulation ofVanuatu wasabout 165000. Total GDP wasoftheorder of
US$189million resulting inaGNP percapita ofUS$600. Mycountry isoneofthefive(5)least
developed countries inthepacific region.
About 80percentofourpopulation depend upon thesubsistence sector fortheirlivelihood.
Theservices sector including tourism, athriving offshore banking sector andthepublic sector contribute
more than66percentoftotalGDP.WT/ACC/SPEC/VUT/1
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Tourism, beef, copra, coffee, kava, squash, pumpkin andother agricultural products areour
main sources offoreign exchange receipts.
Ourindustrial sector isrelatively small, contributing lessthan10%oftotalGDP. Itproduces
simple manufactures. Given theappropriate supportive policies, weareconfident thatthissector will
increase inimportance during thecoming years.
Vanuatu isexposed toexternal anddomestic economic shocks overwhich wehavenocontrol.
Hurricanes strike ourcountry frequently during themonths ofNovember toApril eachyear. The
negative impacts ofexternal economic shocks upon oureconomy areregularly transmitted intoour
country through thegoods andcapital markets.
Economic growth wasinexcess of4.5% peryearfrom 1989 to1991. Butthisdecelerated
toabout 1%peryearsince then.
Inflation ratesaregenerally low; hovering around 5%during thelastsixyears. Ourbalance
ofpayments positions havebeenlessthansatisfactory andforeign exchange reserves low.
Thepoorbalance orpayments positions, Madame Chairperson, reflects Vanuatu 'sposition
asanetimporter ofgoods. Ourtrade balance hasalways beenindeficit. Official external reserves
varyfrom 6to8months ofimports. Theoverall country 'sexternal reserves, including those held
bythebanking system, amount to10to12months ofimports.
Vanuatu 'sexternal debttoGDP ratesincreased from 15%in1989 toabout 23%atpresent.
Thecountry 'sexternal debtservice ratioiscurrently at1%.
Wetraditionally haveaconservative approach tofiscal policy. TheGovernment attempts,
notalways withsuccess, tomaintain balance initsoperating budgets. Thebulkofourdevelopment
expenditures arefinanced through aidorborrowing withsoftterms andconditions frommultilateral
financial institutions.
Vanuatu 'sdomestic taxbaseissomewhat narrow. Werelyheavily upon indirect taxes, such
ascustoms duties, which yieldsome 75%oftotalrevenue. There arenopersonal income andcompany
taxes imposed. Butwedohavebusiness licences which havehelped tomaintain thetotalyield of
Government revenue.
Wearekeenly aware oftheneedtoensure thattheelasticity ofourtaxsystem ismaintained
orenhanced. Ourproposed commitment under theWorld Trade Organization membership willclearly
haveaverydirect impact upontheyieldofourindirect taxes. Inthiscontext wearehaving toexamine
thestructure ofourtaxsystem, notonlytoensure thattherevenue needs oftheGovernment are
protected, butalsotopromote economic efficiency, domestic savings, risktaking andinvestment
activities.
Madame Chairperson, wehavewatched therapidly evolving global economic scene withmuch
interest. Theworld isincreasingly becoming alevel playing fieldfortheeconomically strong and
weak. Wehearthattrillions ofdollars ofcapital areflowing around theworld eachdaylooking for
"parking slots", forcountries which offer them security, stable enlightened policies andthehighest
return.
Wearealsowitnessing,MadameChairperson,increasedfocusbytheindustrialcountries,private
investors, andmultilateral financial institutions uponEastern Europe, theformer republics oftheUSSR
andother strategically andeconomically important developing countries. These countries willreceiveWT/ACC/SPEC/VUT/1
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more andmore aidandcapital fromaworld totalcapital poolwhich isnotgrowing. Soweseefuture
aidandprivate capital flows toourpartoftheworld coming under some strain.
Weseeaworld where competition intrade andcapital isincreasing inintensity. Forour
economy togrow weshallneedoverseas andlocal investments, increased production andexports.
Wemust haveaccess toknow-how, technology andmanagement expertise. Itwould beabsolutely
essential forustobepartoftheglobal trading andfinancial system ifwearetoshare intheglobal
growth expected inthewake ofthenewly established world multilateral trading system.
Madame Chairperson, aWorld Trade Organization working partywasestablished inJuly1995
toexamine theMemorandum ontheForeign Trade Regime andtofinalize theprotocol ofaccession
ofVanuatu. Inthemeanwhile, Vanuatu hasbeengiven observer status intheWorld Trade Organization,
andweareverygrateful forthis. However, Iwould liketoreaffirm myGovernment 'ssupport and
commitment tofullmembership ofthemultilateral trading system.
Themultilateral trading system, ofwhich theWorld Trade Organization willbeaneffective
policeman hasparticular attraction tosmall countries suchasVanuatu. Weseethesystem ashaving
fairandtransparent ruleswhich govern theconduct ofmembers. Parties, particularly theeconomically
weak, which runintotemporary difficulties areoffered relief.
Dispute procedures, towhich weareallowed access, areclearly setout.Forusthesystem
promises order andstability inwhich "might doesnotnecessarily connote right". Inaworld where
economic strength varies somuch, arulebased system which iseffectively administered, definitely
affords confidence toandprotection forthesmall andweaker members.
Weareaware, Madame Chairperson, thatifwearetobenefit fromintegration intotheworld
multilateral trading system, much workwillberequired ofusinrestructuring oureconomy anddomestic
policy framework. Suchchanges willinclude policies andlegislative structures which areconsistent
withtheobligations ofWorld Trade Organization membership.
Inthisconnection itisprobably useful ifIemphasize thatwehavepursued policies ofopenness
forsome time. Vanuatu doesnothaveforeign exchange control. Residents havealways hadthefreedom
toinvest inoverseas currencies oftheirchoice. They mayalsoborrow externally without restraint.
Foreign investments arewelcome inVanuatu. Suchinvestors enjoy unrestricted access tothedomestic
money andthecapital markets. Asalready intimated, wedonothavedirect taxes andourtaxsystem
isheavily dependent onindirect taxes particularly customs duties. Such duties arenotdesigned to
protect domestic industries. These aregenerally intended forrevenue purposes. Ourtariff system
doesnotdiscriminate against anyparticular country. Infactourimports aresourced from allover
theworld andweprideourselves inhaving wideranges ofgoods catering toalltastes within thecountry.
Itwould beourintention, Madame Chairperson, tomaintain close contact withofficials of
theWorld Trade Organization. There aredetails inthevarious documents oftheGATT round of
theWorld Trade Organization which needtobefurther digested byus.
Theobligations which arespeltoutinthese documents weshallcarefully unearth withthe
co-operation andguidance oftheWorld Trade Organization officials.
Alsothepotential benefits andcostsweshallneedtoexamine meticulously. Butthegeneral
principles arethebroad potential advantages toourcountry. Wehaveakeeninterest inmembership
oftheWorld Trade Organization andintegration ofoureconomy intothemultilateral trading system.WT/ACC/SPEC/VUT/1
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Madame Chairperson, myGovernment hasaccorded highpriority toourmembership tothe
World Trade Organization .Thisisreflected inourcountry undertaking three (3)separate missions
toGeneva injustovertwo(2)years.
Asyouareaware, theprocess ofVanuatu 'saccession totheWorld Trade Organization was
initiated bythelastGovernment. Iamplease tosaythatthepresent Government places equal importance
toVanuatu 'sfullmembership, andthisisoneofthepolicy areas inwhich wehavegeneral consensus.
Finally, Madame Chairperson, mayIreiterate ourinterest injoining themultilateral trading
system. MayIalsotakethisopportunity tothank theDirector-General, MrRenato Ruggiero, Director
ofAccessions Division, MrArifHussain, advisors totheAccessions Division andofficials ofthe
organization forthecourtesies, guidance andassistance given tomeandmydelegation during this
visit.
Distinguished Members oftheWorking Party;
ladies andgentlemen;
Ithank youforyourkindattention.