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.

The Melanesian Spearhead Group (MSG) Preferential Trade Agreement is a trade treaty governing the four melanesian states of Vanuatu, Papua New Guinea, the Solomon Islands and recently, Fiji.
The MSG Trade Agreement signed in 1993 is a sub-regional trade treaty established to foster and accelerate economic development through trade relations and provide a Political framework for regular consultations and review on the status of the Agreement, with a view to ensuring that trade both in terms of exports and imports is undertaken in a genuine spirit of the Melanesian Solidarity and is done on a Most Favoured National (MFN) basis.
The MSG Trade Agreement is GATT consistent and has recently been approved and accorded recognition by the World Trade Organisation (WTO) Committee on Regional Arrangements to be compatible and meeting the requirements of Article 24 of the GATT/WTO Agreement.
This Agreement covers over 180 tariff lines of the Harmonised Systems of Customs Tariff Code and is consistent to agreed trade rules and obligations.
Negotiations are held regularly between the leaders of the four countries to consider the progress and developments of the MSG Trade Agreement.
Solomon Islands, Papua New Guinea and Fiji are members of the WTO. The Government of Vanuatu is also currently negotiating its accession with member governments of the Multilateral Trading System for membership into the World Trade Organisation (WTO).
The MSG countries have the potential to trade in over 200 products free of fiscal duty. The MSG countries are also spearheading the MSG Free Trade Area as a nucleus for progressing trade liberalisation in the region, as a forerunner for a proposed Forum Island Country (FIC) Trade Agreement.
The main aim of MSG is to promote and facilitate the free flow of identified goods and services. To ensure as far as possible that trade between the Parties takes place under conditions of fair competition; and to contribute to the harmonious development and expansion of world trade and to progressive removal of barriers thereto. The Parties shall make every effort to plan and direct their development policies with a view to creating conditions favorable for the achievement of the objectives of the agreement and the implementation of the provisions of this Agreement and shall abstain from taking any measures likely to jeopardise the achievement of its objectives and the implementation of its provisions. Secondly the Parties shall extend the product coverage in this Agreement in order to ensure that the duties and other restrictive regulation of commerce are eliminated on substantially all the trade between the Parties. The Parties may agree to the association of any other member of the Melanesian Spearhead Group or any other country which is a member of the South Pacific Forum.

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 the full version of the MSG Product List, Vanuatu List and PNG 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 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. While it is too early to gauge the effectiveness of the scheme, a review of the Scheme by the Australian Department of Industry Science Recourses is due by the end of September 2001.