Pacific Aid for Trade Strategy: 2014 - 2017


The Pacific Aid for Trade (AfT) Strategy 2014- 2017, herein referred to as “the Strategy”, is a tool for harnessing consensus between Pacific Island Country member states (Cook Islands, Federated States of Micronesia, Fiji, Kiribati, Nauru, Niue, Palau, Papua New Guinea, Republic of Marshall Islands, Samoa, Solomon Islands, Tonga, Tuvalu, Vanuatu, including Timor-Leste) on the priorities for ensuring a growing, and more diversified regional economy. The ultimate goal of the Strategy is to outline a coherent approach to resource mobilisation, one that sends a strong signal to donors, investors, and international development partners that the region has a clear sense of how it can best utilise existing and future resources.

Pacific Island Countries (PICs) have had limited success in benefiting from regional trade arrangements and accessing preferential markets. Physical isolation and geographic fragmentation continues to inhibit intra-regional and external trade; small populations place a prohibitive barrier to any exploitation of economies of scale; high transport and communication costs and protection of key sectors undermine competitiveness; multilateral trade liberalisation is not widespread and protectionist measures are often invoked; and inadequate infrastructure and limited and expensive intra-regional transport links constrain tourism in the region. PICs share these key economic characteristics which present distinct challenges affecting its ability to reap potential gains from trade. A reversal of these trends requires wide-ranging initiatives that extend well beyond the narrow focus of trade liberalisation

Pacific AfT will help PICs meet their trade potential, tap into new exports and markets as well as coherently address the capacity constraints facing the region. It will invariably assist PICs improve their trade-related infrastructure, increase their supply-side capacity, undertake appropriate trade and regulatory reforms and adopt the necessary adjustment measures to be able to effectively address its distinct economic challenges and therein benefit from international trade opportunities arising from multilateral, regional and bilateral trade regimes. The Pacific region needs to re-position itself in view of this new economic geography.

This refreshed Strategy therefore recognises that if the region is to have a realistic chance of attaining its integration objectives, achieve sustained economic expansion, and effectively integrate into the global trading system, it must strategically prioritise key and immediate regional AfT objectives and interventions that will address its immediate systemic constraints in a systematic and integrated manner. This Strategy includes a holistic and comprehensive policy approach towards competitiveness, adjustment and trade development with a view to capturing existing and new dynamic sources of demand. 

This Strategy is a refined and renewed version of the 2009 Pacific AfT Strategy that was endorsed by Pacific African Caribbean and Pacific (PACP) Trade Ministers at their June 2009 meeting in Apia, Samoa. The Strategy is based on the new Framework for Pacific Regionalism, which was recommended to Leaders by the Pacific Plan Review 2013 and endorsed at their Special Leaders Retreat in May 2014 as a replacement for the Pacific Plan.1 The Strategy aims to provide PICs, including Timor-Leste, an efficient and effective way of delivering regional trade-related assistance in a timely and effective manner. 

The goal of the Strategy is to facilitate trade expansion in PICs thereby contributing to their economic prosperity and sustainable development. In order to achieve this goal, four objectives have been identified in the Strategy, which will cumulatively contribute towards the attainment of the goal. The four objectives in the Strategy are as follows:

(i) Improving trade-related infrastructure. This assistance will help PICs build the physical means — transport and storage, communications and energy — to produce goods and export them. 
(ii) Increasing productive capacity for trade, including trade development (e.g. supporting the private sector to exploit their comparative advantages and diversify their exports). It is targeted at helping enterprises to trade and creating a favourable business environment.
(iii) Promoting trade-related adjustment (e.g. helping PICs with the costs associated with trade liberalization, such as tariff reductions, preference erosion, or declining terms of trade) .
(iv) Improving trade policy and regulatory environments conducive to achieving sustainable economic growth. This will help build local capacities for development of national trade policies, participation in trade negotiations and implementation of trade agreements. 

Further, to effectively address the key barriers inhibiting the region’s ability to increase its competitiveness, reduce inefficiencies and enhance the beneficial opportunities emanating from regional economic integration arrangements and taking into account its unique economic challenges, immediate priorities will be placed on two objectives. These are (i) improving the region’s trade-related infrastructure; and (ii) increasing its productive capacity for trade, including trade development. The latter will focus on supporting the private sector of PICs to exploit their comparative advantages and diversify their exports.

Finally, while the Strategy reflects the current priorities of the Pacific region, it will be periodically updated to reflect new mandates, points of intervention and the changing trade landscape. As dialogue between all the development partners, investors, and the region continually evolves so too will the Strategy thus becoming a dynamic living document.

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