Excellencies,
Esteemed Panellists,
Ladies and Gentleman,
Bula Vinaka and a very Good morning and good afternoon to you all.
It is my pleasure to be virtually participating in this panel discussions and I acknowledge the organisers for bringing us together.
I do not need to remind anyone present that we are in uncertain times and that we are engaged in truly unprecedented discussions. We all live in this reality every day. The world is trying to navigate through the economic wreckage caused by COVID-19, and the resulting 150 million people who could be pushed into poverty very soon—in addition to those who are already suffering. Needless to say, we must move urgently from dialogue to action to produce solutions that will not just stem the losses, but will help vulnerable countries—especially SIDS— keep pace with an inclusive global recovery.
Excellencies and Colleagues,
The Pacific region is home to a number of the world’s ‘smallest’ Small Island Developing States (SIDS). Fiji, as one of the SIDS, faces many challenges with respect to international trade, due to our small size, remote location, distance from key markets, and to top it all, the existential threat we face in relation to climate change and environmental degradation.
Our narrow resource base, small size and landmass means that our economies are extremely vulnerable to natural disasters, which have the potential to wipe out resource supplies for the whole country and bring economies to a standstill. In the longer term, a rise in sea levels threatens our very existence.
Natural disasters also regularly disrupt our economic activities and divert limited resources to rehabilitating and rebuilding the infrastructure. The COVID-19 pandemic has only exacerbated our vulnerability and further exposed us to external shocks. It has wiped out decades of our development and the investments that were made, in a matter of months.
Excellencies and Colleagues,
Fiji comprises more than 300 tiny islets hence, maritime trade and transport underpins supply chain linkages that are essential to Fijian businesses and support service sectors, like tourism.
When disruptive factors such as climatic events and pandemics occur, it sends shockwaves across supply chains and transportation links, crippling businesses who depend on them.
Our remoteness also entails dependence on transport providers with high transport costs, which are already higher for small volumes. This restricts their ability to bargain for better prices or change to more efficient carriers if there are service lags. Thus, raises the price of our imports and exports.
Excellencies and Colleagues,
Fiji’s transport and logistic network were also disrupted to a high degree by lockdowns and border restrictions implemented due to the pandemic. This has as a result, increased costs for freight and raw materials for production of goods, and has also increased the time it takes to trade.
In order to maintain supply chains, especially for perishable goods, our national carrier – Fiji Airways, established weekly freight services, to help businesses plan supply logistics. Despite this, transport and logistics pose a huge challenge for our businesses.
Excellencies and Colleagues,
As a result, the production of goods export is more costly in SIDS economies. This is why it is difficult for our exporters to compete in a free global market. Economies of scale cannot be realised by small local producers because the cost of materials and other inputs are high, especially when they must be imported.
The agriculture and manufacturing sectors are important for income generation and food security, and is the main source of work for the majority of Fijians. Usually, most of our exports are concentrated on commodities, such as sugar cane, kava, root crops, cocoa, coffee, banana, fish, tropical fruits and forest products, and manufactured items, including processed foods, textile, clothing and footwear.
Unfortunately, most of these industries have suffered tremendously at the hands of natural disasters, and due to decline in world market prices or end of preference schemes.
For instance, in response to challenges made within the WTO based on the most-favoured nation principle, the EU’s preference arrangement on sugar, on which the sugar industry of Fiji and other SIDS relied upon, was eliminated. It has exposed our exporters to competition from much larger and technologically advanced nations.
Because of the disadvantages we face, market access on equal terms with other countries is unlikely to be enough to enable us to increase exports, this is why preferential access is necessary for SIDS.
We need the international trade regimes to accommodate our needs and contribute to our development. This can only be made possible if special provisions are created to address the challenges SIDS are facing, instead of using a cookie cutter approach. It will be difficult or even impossible to compete in a liberalised global market without special treatment granted to SIDS.
Moreover, instead of being pushed to meet inconsiderate international obligations and being labelled as a tax havens, in pursuit of attracting investments to create jobs and support our economy – if the international community really wanted to help – this is where they should start:
i) Trade negotiations like fisheries subsidies agreement should mandate effective appropriate carve-outs and special and differential treatment for SIDS, whose livelihood is dependent on small-scale artisanal fisheries.
ii) In addition to this, assistance can be rendered to enhance the competitiveness of small island producers, to help address the ‘inherent structural disadvantages’ of small and remote economies.
This could include measures designed to address high production and transport costs, to help identify and exploit market niches, or to develop necessary infrastructure and skills to increase export capacity and competitiveness.
iii) COVID-19 has led to a surge in e-commerce and accelerated digital transformation. Thus, support is needed in terms of building capacity for the adoption of digital commerce platforms for trading, which will allow cost reduction and enhance competitiveness.
iv) Apart from the elimination or lowering of duties and charges, it is vital to implement improvements to reduce trade costs by undertaking regulatory reforms for the ease of doing business and trade facilitation. Whilst we have requested assistance to implement these vital reforms, we have received little to no support on measures that require high levels of institutional capacity and resources, that SIDS do not have access to.
v) Trade has the potential to drive solutions for climate change and building resilience. Thus, SIDS require support to adopt and promote mutually supportive economic and environmental policies that enable production in green sectors and scale up the use of clean technologies.
vi) This is why an increased presence of UNCTAD in the Pacific is imperative to understand the specific and unique challenges the Pacific SIDS face. A generic solution, based on limited data, offers little to no benefit to addressing these key concerns.
Therefore, the UNCTAD XV mandate or the text should capture the need to have tailor-made support measures for SIDS based on their most urgent needs to recover from their inherent vulnerability and development.
Excellencies and Colleagues,
It is obvious that trade is the main engine and driver for economic growth and sustainable development and SIDS are missing out. But it is not just about reducing trade costs, but eliminating structural disadvantages, adapting and mitigating climate change to enable countries to effectively participate in regional and global value chains. Thus, there is a lot more UNCTAD can do in this space.
The issues I have highlighted have been subjected to debate continuously. The key question is, how do we neutralise or minimise the constraints SIDS face in terms of economic growth?
It is an important test to the international community of how it treats its vulnerable members. The special challenges and inherent vulnerability that we face must be taken into account in strategies for trade and development.
For the SIDS to stay afloat and survive, we must re-innovate and re-strategise our priorities for the benefit of all.
Vinaka Vakalevu. Thank you very much.