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> Excerpts from the IAP Study Report of Papua New Guinea
Excerpts from the IAP Study Report of Papua New Guinea
All APEC Member Economies are striving to meet the APEC free trade goals set in Bogor, Indonesia, in 1994. These are what was then stated as "the long-term goal of free and open trade and investment in the Asia-Pacific" by no later than 2010 for industrialized economies and 2020 for developing economies.
As these target dates draw nearer each APEC Member Economy has undertaking a voluntary review of the Individual Action Plans (IAPs) they are implementing to achieve their Bogor Goals.
According to the approved terms of reference, the review focuses on thirteen specific issue areas considered in an economy's IAP in which progress and best practices towards the achievement of the Bogor goals will be considered.
Following are excerpts from each of the thirteen areas considered in the IAP Peer Review Report Study Report on Papua New Guinea.
The report was prepared by the designated Independent Expert, Mr. Gordon La Fortune from Grey, Clark, Shih and Associates of Canada.
The full report will be available from March 4.
Tariffs
Papua New Guinea has made extensive changes to its tariff schedule since 1999. These changes have resulted in reduced tariff measures and in simplification. The tariff schedule is also available on the APEC tariff database. In light of these changes, Papua New Guinea has gone a long way toward achieving the objectives of progressively reducing its tariff measures and ensuring transparency.
Papua New Guinea began to review its tariff with the 1997 White Paper on the Tariff Reform Program. The White Paper noted that two-thirds of imported goods faced duties of 5% to 11% and that one-third of imported goods faced duties over 40%. The average nominal rate imposed under the tariff schedule was 22%. The weighted average rate was 14%. The Tariff Reform Program was adopted in response to the White Paper. The objective of the program is to reform the tariff and reduce duty rates to encourage a more efficient and productive private sector by reducing unnecessary costs.
The Australian Department for Foreign Affairs and Trade has commented that, "ongoing tariff reform has made Papua New Guinea one of the least restrictive trade regimes of any developing country."
Non-Tariff Measures
Papua New Guinea maintains relatively few non-tariff measures. There are no import restrictions, export licenses, or tariff rate quotas. Papua New Guinea prohibits exports of teak, imposes export taxes on unprocessed wood, restricts access to fish harvesting and processing and maintains strict quarantine restrictions. Papua New Guinea imposes measures that restrict access to the fishery to Papua New Guineans.
Although Papua New Guinea maintains relatively few non-tariff measures, and is taking steps to address its quarantine measures, it should review its few non-tariff measures to determine whether they are necessary and, if not, how they could be amended to bring them into compliance with the Bogor goals by 2020.
Services
Access to the services sector is affected by restrictions imposed through visa and immigration requirements, through the investment certificate process administered by the Investment Promotion Authority, as well as through access restrictions set out in Papua New Guinea's 2004 IAP Response. During the in-economy visit, Papua New Guinea questioned the extent of liberalization required to achieve the Bogor goals. Officials and ABAC members took the position that the ultimate goal of liberalization of services is somewhat vague and open to interpretation. Officials indicated that their intention is to work toward fully achieving their Bogor goals by 2020, but from their perspective, the target requires better definition.
During the in-economy visit, officials stressed that Papua New Guinea is an open economy that imposes very few restrictions on foreign service providers. The 2004 IAP Response tends to support this interpretation and also indicates progress towards further liberalization. However, barriers that restrict access in some sectors remain. Papua New Guinea should continue to review access to its service sector to determine whether further liberalization is possible.
Investment
As part of the overall structural reform, Papua New Guinea is taking steps to liberalize its investment measures. These steps include eliminating the Reserved Activities List in favour of the Cottage Business Activities List and taking steps to eliminate "time factored" incentives and special arrangements with investors. Although some restrictions will remain, Papua New Guinea is taking positive steps to achieve its Bogor goals.
Papua New Guinea has recognized that the "special arrangements" negotiated with investors are not an effective means of promoting investment. These incentives have been described as "counterproductive, impractical or inconsistent." Papua New Guinea has also criticized the role of Ministerial discretion in investment promotion.
To address these issues, Papua New Guinea has taken steps to move away from the use of special arrangements and Ministerial discretion in favour of transparent and predictable investment incentives.
Papua New Guinea is taking positive steps to liberalize its investment and meet its Bogor objectives. The proposals to eliminate the Reserved Practices List in favour of the Cottage Business Activities List, and to eliminate the "time-factored" incentives in favour of known and predictable tax incentives, will go some way to achieving the Bogor goals. Whether these steps are realized will depend on government's commitment to reform.
Standards and Conformance
In its 2004 IAP Response, Papua New Guinea outlined its policy on standards and conformance and the steps that must be taken to give effect to that policy.
Papua New Guinea has indicated that it intends to fully achieve its Bogor goals relating to standards and conformance. As first steps, officials are focusing on basic capacity building and developing stakeholder awareness.
Customs Procedures
Papua New Guinea is taking steps to modernize its Customs Procedures as a means of enhancing economic development and growth. Officials are confident that the "slow and steady advance" approach that has been adopted will allow them to fully implement their Bogor goals by 2020.
Papua New Guinea is moving to a paperless trading system. Infrastructure to support the system is currently being installed. A pilot project is in place at Port Moresby and Jacksons International Airport. Officials hope to have the system in place at all ports by July 2005.
Papua New Guinea has made progress towards achieving its Bogor goals. Customs procedures are being amended to conform to the APEC Sub-Committee on Customs Procedures CAP items and some are already in place. However, during the in-economy visit, officials noted some difficulties in going forward. First, it is not clear that IRC has the capacity to fully implement the customs program. Officials noted that they must work within the existing staff complement to meet these obligations. Officials have prioritized existing responsibilities and have assigned staff with an eye to achieving those objectives. In light of the Government?s "right-sizing" program, it may be more difficult and take longer for Papua New Guinea to complete its customs modernization program. Second, officials raised concerns relating to infrastructure. They noted that Papua New Guinea has 21 ports, the vast majority of which are located in remote areas. Officials noted that the current infrastructure limits their ability to fulfill the WTO TRIPs border enforcement requirements.
Intellectual Property Rights
Papua New Guinea has had legislation in place to register and protect trademarks for at least 25 years. It has recently extended protection to patents, industrial design, and geographic indicators (which are treated as trademarks) and has introduced copyright protection. Papua New Guinea has recognized that the Trade Marks Act is out-of-date and must be amended. One objective of the amendment process is to ensure that the legislation is fully consistent with TRIPs obligations and with the Madrid Protocol. During the in-economy visit, officials indicated that they hope that these amendments will be passed by Parliament in three to six months.
Papua New Guinea has taken positive steps toward achieving its Bogor goals, but much work remains to be done, particularly with respect to enforcement.
Competition Policy
As part of its structural reform process, Papua New Guinea established the Independent Consumer & Competition Commission (ICCC) in 2002. The Commission is an independent body that reports directly to Parliament. By establishing the ICCC as an independent body with authority to address competition law and regulatory review/deregulation, Papua New Guinea has taken positive steps towards achieving its Bogor goal relating to competition policy.
The ICCC has established a website to publicize its rules, reports, legislation and planning and priority documents. In addition, the ICCC has set increasing public awareness as a priority. To achieve this objective, the ICCC has undertaken an information program, primarily aimed at businesses, to outline the role and function of the Commission. The ICCC is also seeking to consult with stakeholders, primarily business and consumer groups.
Based on its efforts thus far, it is likely that Papua New Guinea will achieve its Bogor goals with respect to competition policy by 2020.
Government Procurement
Papua New Guinea has taken steps to liberalize its government procurement procedures. The decision to establish the CSTB and eliminate a number of tender boards reduced complexity and should allow Papua New Guinea to realize better value for money in its procurement system. Papua New Guinea is taking steps to address the use of Ministerial waivers and to limit the use of Certificates of Inexpediency. However, the process for conducting sole source procurements through the Certificate of Inexpediency process, the process for notifying potential suppliers of a decision to go to sole source procurement and the discretion to issue binding directions requiring that preferences be accorded to local suppliers should be addressed by Papua New Guinea. Although progress towards achieving the Bogor goals has been made, officials recognize that steps still have to be taken.
Implementation of WTO Obligations
With respect to rules of origin, Papua New Guinea has indicated that it applies rules of origin consistent with the WTO Agreement on Rules of Origin. In addition, Papua New Guinea is a member of the Papua New Guinea - Australia Trade and Commercial Relations Agreement (PARTCRA) and the South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA), both of which apply a 50% value-added and "last process of manufacture" rule of origin. Under this approach, a good originates in Papua New Guinea if the last manufacturing process that resulted in creation of the good was carried out in Papua New Guinea and at least 50% of the value of the good is added in Papua New Guinea. Papua New Guinea is also a member of the Melanesian Spearhead Group Trade Agreement, which has a loose rule of origin.
Dispute Mediation
Papua New Guinea has procedures in place for the mediation of disputes at the state-private and private-private level. Papua New Guinea has never been a party to a WTO dispute.
It appears that the dispute mediation system in place in Papua New Guinea is very advanced and close to achieving the Bogor goals. The dispute mediation processes themselves are based largely on cooperative approaches to dispute settlement and appear to be applied in a timely manner. Papua New Guinea is encouraged to take action necessary to increase transparency of its laws, regulations and administrative procedures relating to dispute mediation to encourage a secure and predicable business environment.
Mobility of Business Persons
Papua New Guinea has conducted a review of its migration legislation with an eye to improving administration and introducing a visa regime that supports the government's development strategy. Based on this review, officials are currently developing proposals to amend the Migration Act with the intention that these proposals be put to government for consideration in 2005.
Papua New Guinea is also developing the required legislation and procedures to implement the APEC Business Travel Card.
Papua New Guinea is taking steps to amend its immigration policies in a manner that supports greater business travel. Once implemented, these amendments will go some way to implementing Papua New Guinea?s Bogor Goals. However, during the in-economy visit, officials noted that the Immigration & Citizenship Division of the Department of Foreign Affairs and Immigration, the body responsible for immigration programs, does not have sufficient resources to properly perform its immigration functions. Officials noted that the entire complement of the Division is 20 people who are responsible for all immigration and temporary entry into Papua New Guinea. Although Papua New Guinea is taking steps to amend its immigration policies, the concerns raised by officials during the in-economy visit indicate that it may be difficult for Papua New Guinea to fully implement these policies in the short to medium term.
DeRegulation/Regulatory Review
The Independent Consumer and Competition Commission (ICCC) was given responsibility for regulatory review and deregulation when it was established in 2002. Section 5(1)(b) of the Independent Consumer and Competition Commission Act (ICCC Act) gives the Commission responsibility to "promote economic efficiency in industry structure, investment and conduct". This is the basis of the ICCC's authority to conduct regulatory reviews and propose deregulation.
Papua New Guinea has indicated that it is committed to regulatory review and to eliminate regulations that would restrict business and investment. The first steps have focused primarily on regulatory reform intended to make the public sector and privatized corporations more efficient. Efforts to review regulations that affect the private sector and to deregulate as appropriate will be important steps to achieve the Bogor goals.
Establishing the ICCC as an independent body and giving it jurisdiction to conduct regulatory reviews and to propose deregulation represent a significant step by Papua New Guinea to meet its Bogor goals. The Commission was established in 2002 and has only just begun its work. Based on its efforts thus far it is likely that Papua New Guinea will achieve its Bogor goals with respect to deregulation and regulatory review.
For further information contact
Gordon La Fortune
, E-mail:
glafortune@greyclark.com
Christopher Hawkins
on +82 11 9683 0326 (Korea Cellular), or E-mail:
ch@apec.org
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