TRADE RELATIONS

Fiji adopts a multi-faceted approach to trade and is signatory to a number of bilateral, regional and multilateral agreements.

Bilateral Trade Agreement with Pacific Island Countries

Currently, Fiji has in place a non-reciprocal Bilateral Trade Agreement (BTA) with Tonga since 1995. Non-reciprocal concessions are also offered to Tuvalu and the Cook Islands through BTAs signed on 1st October in Funafuti and on 23rd October 1998 in Suva respectively. On the other hand, Fiji also signed reciprocal BTAs with PNG at the end of 1996 and on 23rd July 1998 with Vanuatu. Bilateral negotiations have also been initiated with the Solomon Islands, New Caledonia and Kiribati including Nauru, and Samoa.

Bilateral Trade Agreements with Developed Partners

Fiji has signed full reciprocal Bilateral Trading Agreements (BTAs) with Australia,
Papua New Guinea and Vanuatu. There are also non-reciprocal BTAs with Tuvalu, Tonga and the Cook Islands. Negotiations for BTAs are continuing with New Zealand, Solomon Islands, Kiribati and New Caledonia.

• Papua New Guinea - Fiji-Papua New Guinea Bilateral Trade Agreement   was signed in 1996.

• Vanuatu - The signing of the Fiji-Vanuatu Bilateral Trade Agreement took place in Sigatoka on 23rd July 1998 during the 12th MSG Summit. This is a reciprocal trade agreement.

• Tonga - Fiji-Tonga Bilateral Trade Agreement was signed on 15th September, 1995. The Fiji-Tonga Bilateral Trade Agreement is a non-reciprocal agreement whereby goods included in the Product Schedule are accorded duty free fiscal entry into Fiji.

• Cook Islands & Tuvalu - Fiji’s Bilateral Trade Agreements with Tuvalu and the Cook Islands were signed on 1st October in Funafuti and on 23rd October 1998 in Suva respectively. Both BTAs are non reciprocal in nature whereby goods included in the respective Product Schedules are accorded the zero rated (Free) entry into Fiji.

• Solomon Islands (Proposal) & Kiribati (Proposal) - Bilateral Trade Arrangements have been mooted with the Governments of the Solomon Islands and Kiribati; there have not been any recent signs of concluding    BTAs with these nations.

• Australia - The Fiji/Australia Trade and Economic Cooperation Agreement (FATERA) was signed on the 11th March 1999 in Canberra,   Australia, setting the framework for better bilateral trade between the two countries in the long term. Australia is Fiji’s biggest trading partner (about 60% of Fiji’s total trade is with Australia). At the Fiji/Australia High Level Talks in December 2001, an undertaking was given by Minister Downer for the continuation of FATERA beyond 2004 and the immediate formation of ‘working groups’ to examine the Agreement and identify provisions that can be engaged and enhance towards the benefit of both countries. 

• New Zealand - Negotiations on a Fiji/NZ BTA along similar lines as   FATERA are also progressing with NZ government.

• USA - Fiji signed the current Bilateral Textile Agreement (BTA) with the USA in 1992 which allows Fiji to export four merged categories of garments to the USA under quota system. The Agreement became effective in 1993 and has been renewed twice upon expiry in December 1995 and 1997. Fiji, over the past few years, has been trying to gain better (wider and more extensive) access on garments in the US (especially on categories deemed sensitive by the USA) for the following reasons:

(a) we are small country that is vulnerable to regular occurrences of disasters;
(b) we are dependent on textile exports;
(c) our total export is less than 1% of the market share and will no cause   any dent in the total imports; and
(d) our political development has now developed to the extent that  it will promote the development of free market.

Currently, efforts are focused on initiating discussions on the feasibility of a bilateral/regional non-reciprocal trade agreement with USA modeled along the lines of African Growth and Opportunity Act (AGOA). The objective remains the same, that is, to get greater access of Fiji garments into USA market.

• China - Bilateral Trade Agreement between the People’s Republic of China and Fiji was signed in December 1997, after Cabinet had endorsed the agreement in March 1997. Under the Agreement, both Fiji and China will offer “Most-Favored Nation” treatment in the importation and exportation of goods. Fiji will benefit from lower preferential tariffs that China will offer for Fiji’s export commodities such as sugar, timber and fisheries produce.

• United Kingdom - The balance of trade between Fiji and the United Kingdom has consistently been in Fiji’s favour, governed primarily by the preferential market access granted to Fiji by the Sugar Protocol and the Lomé Convention. The United Kingdom has been the main destination of Fiji’s exports to the European Union, the trade preference given under Lomé has been crucial to Fiji in the stability of its economy. The United Kingdom has traditionally been the second most important market for Fiji’s exports, behind Australia. The trade arrangements allow guaranteed access into the EU markets at prices higher than the world prices. Fiji will push for the preservation of the preferences accorded by the Sugar Protocol of the Cotonou Agreement, in continuing formal negotiations with the European Union, on the new partnership agreements.

Negotiations on a Fiji/NZ BTA was suspended after May 1999. With the incoming of the newly elected democratic government, talks with the NZ government would be re-opened. A major issue that is of great interest to Fiji is the removal of the 25% FIC local content required by the NZ government on Rules of Origin. NZ has been insisting that fruitful talk would only eventuate when Australia terminates its Import Credit Scheme (ICS). With the ICS now replaced by the SPARTECA-TCF Provisions, it is an opportunity for Fiji to re-submit its proposal to NZ for reconsideration.

The USA is a major market for Fiji's export of garments under a quota system as per the Bilateral Textile Agreement signed in 1995 between the two countries which expires by the end of 2004.

Bilateral relations with Japan, South Korea and China have always been cordial. The newly promoted "Look North Policy" hope-fully will further strengthen the relationship.

Fiji has in existence a Bilateral Trade Agreement with China, signed in 1997, under which China offers Fiji's exports MFN treatment. The recognition of need to engage a major emerging world power saw the opening of the Fiji Embassy in Beijing in July 2001. A bilateral agreement on agriculture was signed in August between China and Fiji and relevant ministries of both countries are also working on a bilateral agreement on quarantine issues.

REGIONAL TRADE AGREEMENTS

Melanesian Spearhead Group (MSG) Trade Agreement

The MSG Trade Agreement entered into effect on 22 July 1993 through the efforts of PNG, Vanuatu and Solomon Islands. Fiji be-came a formal member of the MSG Trade Agreement on 14 April 1998.

Even though, the MSG countries have the potential to trade in over 200 products free of fiscal duty, the MSG Trade Agreement's status as a nucleus for progressing trade liberalisation in the region has been overtaken by Pacific Island Countries Trade Agreement (PICTA) due to the decisions taken at the 10th MSG Trade and Economic Officials Meeting.

MSG Trade Agreement, however, still maintains relevance for Fiji, and will continue to do so until all the MSG countries (PNG, Vanuatu and Solomons) fully commit to and ratify PICTA......download full version of the MSG Product List

South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA)

SPARTECA was signed in 1981 between Australia, New Zealand and countries of the South Pacific Forum. It allows duty free access for the products of Forum Island Countries (FICs) to the markets of Australia and New Zealand, subject to "Rules of Origin" regulations. The aim is to redress the unequal trade relationships between the two groups. The Textiles, Clothing and Footwear (TCF) industry has been a major beneficiary of SPARTECA through the preferential access to Australian and New Zealand markets. The objectives of this Agreement are:  to achieve progressively in favour of Forum Island countries duty free and unrestricted access to the markets of Australia and New Zealand over as wide a range of products as possible; Furthermore SPARTECA also aims to accelerate the development of the Forum Island countries in particular through the expansion and diversification of their exports to Australia and New Zealand; and to promote and facilitate this expansion and diversification through the elimination of trade barriers.  Moreover SPARTECA foster the growth and expansion of exports of Forum Island countries through the promotion of investment in those countries; to promote greater penetration by exports from Forum Island countries into the Australian and New Zealand markets through such measures as cooperation in the marketing and promotion of goods from Forum Island countries. Finally to promote and facilitate economic cooperation, including commercial, industrial, agricultural and technical cooperation.

The rapid expansion of the Fiji TCF industry has been attributed to the removal of TCF quotas by the Australian Government in 1987 which allowed quota free and duty free access under SPARTECA, the introduction of the Tax Free Factory/Zone (TFF/TFZ) Scheme in 1988 and the Australian Import Credit Scheme (ICS).

The Australian Import Credit Scheme commenced in July 1991 as part of a larger package of tariff and other industrial reforms in Australia.

Given the Australian and Fiji Governments' commitment to developing a WTO friendly arrangement in place of the ICS, the SPARTECA (TCF Provisions) Scheme was developed. SPARTECA (TCF) provisions concept complements the existing SPARTECA treaty and provides for a change in the way local area content (LAC) is calculated for TCF products (goods) entering Australia from Forum Island Countries (FICs). Under the existing SPARTECA arrangements, goods can enter Australia duty free where the Allowable Factory Cost is greater than or equal to 50% of the total ex-factory cost of manufacturing the goods. These arrangements continue to stand.

The SPARTECA (TCF provisions) Scheme enables companies to utilise Excess Local Area Content (ELAC) from certain SPARTECA qualifying TCF goods to help meet the 50% content requirement in otherwise non-qualifying Eligible Goods. ELAC is only derived where a product's LAC exceeds 70%. Similarly, ELAC can only be used where a product's LAC is greater than 35%, and where there is a last process of manufacture performed in the FIC. 

The duration of the S-TCF Scheme is from 1st March 2001 to 31st December 2004. An extension for 7 years was granted in 2004.