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MANAGING THE CHALLENGES OF WTO PARTICIPATION: CASE STUDY 43

Vanuatu’s Suspended Accession Bid: Second Thoughts?

Daniel Gay*

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 Disclaimer:
Opinions expressed in the case studies and any errors or omissions therein are the responsibility of their authors and not of the editors of this volume or of the institutions with which they are affiliated. The authors of the case studies wish to disassociate the institutions with which they are associated from opinions expressed in the case studies and from any errors or omission therein.

Case Studies main page
Introduction

   

ON THIS PAGE: 
I. The problem in context
The background to accession
Economic conditions
Reasons for the suspension of the accession
II. Some local and external players and their roles
Government and public sector
Technical advisors
The private sector
> III. Challenges faced and the outcome
Export subsidies
Goods
Services
Land ownership
Special and differential treatment
IV. Lessons for others
Coping with limited capacity
Using international resources
Consultation and transparency
Trade negotiations strategy


I. The problem in context    back to top

The background to accession

Vanuatu began its WTO accession process in July 1995, and the main momentum towards membership came in 1997 with the advent of a structural adjustment package known as the Comprehensive Reform Programme (CRP).(1) This set of reforms aimed to improve governance, enhance the role of the private sector, increase economic growth and further liberalize the economy. As part of this last process the programme was directed at reducing trade barriers within the context of WTO membership.(2) The import-substitution policy, followed since independence in 1980, was failing. The economy was generally closed, while Vanuatu had always run a visible trade deficit; some policy-makers and politicians felt that the economy should integrate more into the global economy.

A further impetus towards accession was that all Vanuatu’s neighbours and principal trading partners were WTO members — Fiji, the Solomon islands, Papua New Guinea, Australia and New Zealand. There was a feeling that trade relations would be enhanced under the WTO framework.

 

Economic conditions    back to top

The CRP did not meet many of its objectives. Growth in gross domestic product (GDP) declined in the following five years:(3) per capita GDP was no higher in absolute terms in 2003 than in 1998, and is now about US$1, 150.(4) Exports fell 40% during the same period,(5) incoming investment fell faster than world-wide foreign direct investment trends(6) and government expenditure increased as a proportion of GDP.(7) This failure of economic performance provoked strong opinions from some government officials: ‘The CRP was a complete waste of time. It paid for the salaries of a few consultants and did nothing for the country.’(8)

As Table 1 shows, Vanuatu had consistently run a visible trade deficit since independence in 1980. Whilst cutting the deficit was a motivation for WTO membership, the failure of the CRP to deal with this problem or to improve the economy helped undermine public support for WTO accession.

 

Table 1 :Vanuatu trade trends, 1983-2002

 

Exports*

Imports**

 

Year

million vatu

Trade deficit as % of GDP

1983 2,583 4,338 16
1984 3,939 4,826 7
1985 2,753 5,257 19
1986 1,806 4,849 24
1987 1,937 6,157 29
1988 1,559 5,883 28
1989 1,609 6,727 31
1990 1,783 8,854 38
1991 1,600 7,128 26
1992 2,027 7,131 23
1993 2,140 7,406 23
1994 2,402 8,203 23
1995 2,552 8,507 23
1996 2,708 8,647 22
1997 3,565 8,613 17
1998 3,907 8,931 15
1999 2,907 9,989 22
2000 3,214 9,821 20
2001 2,302 10,357 24

* Merchandise.
** Cleared for home consumption.
Source: Department of Statistics; author’s calculations.

In the eyes of local business people, many civil servants and some of the public, the WTO was tarred with the same brush as the CRP, and the decline in economic performance reinforced protectionist attitudes.

 

Reasons for the suspension of the accession    back to top

In 2001, just before the Doha Ministerial Conference, when Vanuatu was due to accede, the Minister of Trade withdrew a finalized working party report, citing ‘technical reasons’.(9) During the subsequent two years little progress was made towards accession, although in 2004 Vanuatu began another attempt.

Local players cite several reasons for the suspension of accession apart from the general economic downturn and the failure of the CRP. The most immediate reason was that a general election was due in May the following year, and the Minister of Trade was concerned about protectionist pressures from a small number of business interests, particularly in the area of wholesale and retail trade.(10)

The leader of the negotiating team, Roy Mickey Joy, admits that negotiators did not communicate enough with ministers, partly as a result of frequent political change. Others confirm this view: ‘Political instability was … a problem. Different ministers also had different views on the WTO. There were insufficient consultations between the political level and the civil servants … We were going into negotiations without consulting other line departments. There were insufficient consultations between the Ministry and the Department.’(11)

The political system is unstable, with constantly shifting coalitions in office for a few months at a time. Institutional memory is short, which made it difficult for negotiators to keep ministers informed. In Vanuatu ministries are separate from departments, which meant that the Department of Trade, which deals with technical matters and line duties, had minimal contact with the ministry. It has been suggested that when the Minister of Trade suspended the accession process in 2001 it was the first time that he was fully aware of the contents of the accession package.

A number of players believe that the accession process was too burdensome for a small, least-developed country (LDC). Only around five members of staff, based in the departments of Trade and Customs, were available to deal with accession. They had no prior experience of General Agreement on Tariffs and Trade (GATT) or the WTO.

Funding was scarce, particularly at a time of economic downturn and fiscal austerity. No resources were available for a social or economic impact study. Vanuatu had no mission in Geneva. The numerous trips to Geneva necessary for membership were difficult to fund, and cost an estimated total of VT 20 million (US$150,000). Vanuatu has never paid its annual fees as a WTO observer, which in 2003 were 23,070 Swiss francs,(12) representing around 14% of the total annual Department of Trade budget.(13)

There was particular pressure on Vanuatu because it would have been the first LDC to join the WTO. Members of the working party, in particular the United States, extracted the maximum concessions possible — what some have termed ‘WTO-plus’.(14) Those involved with accession believe that the negotiation process was stacked in favour of incumbents, a particular problem for small, capacity-constrained Vanuatu: ‘At present, accession is a power-based process within which the applicant — even the largest and seemingly most powerful, such as China — has no real power to inflict any marginal cost on a demandeur.’(15) There was also a fear among local people that, following independence in 1980, Vanuatu was re-selling its country to foreign interests. At least two prominent civil society and NGO members have expressed fears of ‘re-colonization’.(16)

In sum, Vanuatu did not have sufficient ownership over the outcome of negotiations. In the absence of consultation and information, the logical option for doubters was to oppose the entire WTO process.

This lack of ownership was due to the asymmetry between members and acceding countries. Also to blame were the problems typical of small, developing countries — a lack of experience, insufficient communication between negotiators and politicians, and limited resources. The ability of politicians to distance themselves from the final result meant that accession was always vulnerable to protectionist pressures from prominent business and civil society interests.

It might be asked why Vanuatu wanted to join the WTO if the costs were so high. However, it is only through the protection of a rules-based system and access to the dispute-settlement mechanism that many Vanuatu officials felt the country could function successfully in the world economy. As globalization proceeded — meaning, for example, the erosion of Vanuatu’s trade preferences as an LDC — many believed that it was important to be a part of the multilateral trading regime.

 
 

II. Some local and external players and their roles    back to top

Government and public sector

The Council of Ministers

Vanuatu had nine different governments between 1995 and 2004;(17) political instability made it very difficult for the negotiating team to keep the Council of Ministers informed of developments. Although its members knew that Vanuatu was joining the WTO, most were unaware of any details of the accession package and did not understand the role of the WTO. A lack of confidence in representatives has made many civil society actors cautious about WTO participation: ‘One of my concerns is our ability to participate effectively in WTO meetings. For instance our parliament has fifty-two members, but you only ever hear three talking throughout the year. How confidently can we participate? If we can’t participate effectively we might as well not be included.’(18) Some members of the Council of Ministers acted on behalf of a handful of outspoken business people. Non-governmental organizations (NGOs) had little impact on the Council of Ministers.

Ministers of Trade

Six different Ministers of Trade took office between 1995 and 2001. Two of the most pro-active were Willy Jimmy Tapanga Rarua, then a member of the francophone Union of Moderate Parties (UMP) but now deputy leader of the centrist National United Party, and Rialuth Serge Vohor, former UMP Prime Minister and Trade Minister in 2001.

Vohor can be said to be neither particularly pro- nor anti-WTO. His concern in 2001 was primarily re-election the following year. It is also alleged — although difficult to prove — that he was influenced by the powerful Dinh business family.

Tapanga Rarua, again the Minister of Trade for the first half of 2003, is more well-disposed towards WTO membership. He was also from the same Wantok (extended family) as many in the negotiating team, a relationship which improved communications between the team and the ministry. The greatest progress towards membership was made during his time in office.

The Director General and political advisors

The Director General of Trade and Foreign Affairs, in office since 1997, provided important stability. This position was created with the aim of mediating between the department and ministry and providing guidance alongside advisors appointed by the minister.

Political advisors were motivated primarily by a concern to remain in employment, as their jobs finished when the minister left office. They were therefore conservative and did not push for WTO membership.

The Director General of Trade was answerable to three ministers — for Industry as well as Foreign Affairs, and Trade and Commerce — who were often from different political parties. He had wide-ranging responsibilities and attempted to achieve a compromise between the differing policy stances.

Director of Trade

Roy Mickey Joy, Director of Trade, Industry and Investment since 1998, has provided the strongest impetus towards accession of any official or politician. He led the negotiating team, alongside the Director of Customs, and communicated with foreign capitals during bilateral discussions. The Department of Trade is the WTO focal point.

Joy is one of only a handful of civil servants or politicians who are trained and experienced in WTO matters and can operate successfully on the international stage. With a team of only five officials, however, split between two departments, he was over-stretched during accession: ‘We were basically dealing with goods, without realizing that other important aspects were not addressed, such as agriculture or services. The suspension of accession was timely. It gave us an opportunity to do more work, and to realize the costs and benefits.’

As for any acceding country, terms of membership were decided during accession. The rules were particularly unclear for Vanuatu as potentially the first LDC to accede. This absence of clear guidelines or rules meant that despite his best efforts the Director of Trade found it difficult to comprehend the implications of many points of negotiation.

 

Technical advisors    back to top

Pacific Islands Forum Secretariat representative at the WTO

The part-time Forum Secretariat representative helped to formulate the negotiating position and was involved with some bilateral discussions. His prior WTO knowledge made up for the lack in domestic experience. Correspondence makes it clear that this source of technical help was important,(19) and shows the benefits of pooling resources within the Pacific region. The consultant, who understood Melanesian cultural and economic priorities, was able to prioritize local demands.

WTO Secretariat, Accessions Division

The accessions office provided technical input during accession. A major motivation was to bring the negotiations to a swift conclusion. Some commentators have called into question the independence of the secretariat, suggesting that in order to enhance the development credentials of the WTO following Seattle, WTO officials as well as prominent members wanted countries from the three official levels of development to join at Doha: Taiwan, a newly industrialized country, China, a developing country, and least-developed Vanuatu.

The WTO official was, in my view, representing one big player when he came here. There was no face-to-face bilateral; we were only exchanging correspondence … The WTO Secretariat appeared not to be acting independently — it was pushing on behalf of a particular country.(20)

While these are serious allegations, it seems particularly important for national officials to see the WTO Secretariat as strictly impartial. Face-to-face negotiations, rather than the secretariat only delivering responses, may help. Rushing responses forced Vanuatu into making ill-considered decisions.

 

The private sector    back to top

Chamber of Commerce

The Vanuatu Chamber of Commerce is unusual in that it is funded by government. Because they pay no fee, corporate members take a varying interest in its operations. Although in favour of WTO entry, the Chamber was relatively uninvolved in the accession process. Officials believe that they should have been consulted more closely: ‘People weren’t sure what the WTO was. They didn’t know what the benefits were for Vanuatu … The private sector and NGOs were not consulted on the process. That’s why there wasn’t any support from the stakeholders.’(21)

The Chamber of Commerce argues that Vanuatu has insufficient domestic production to be able to take advantage of increased market access. The argument is not that WTO entry would be damaging, but that it is not currently relevant.

Companies

Around six vocal manufacturing companies form a powerful lobbying interest. Most of these firms have sheltered behind high trade barriers since independence, despite manufacturing comprising only 3% of GDP.(22) Under the Melanesian Spearhead Group Free Trade Area, a regional trade agreement, each company has managed to negotiate protective import tariff rates of 35% for their main product, including ice-cream, wooden furniture, toilet paper, fruit juice, corned beef and sawn timber.(23)

Manufacturing companies were broadly hostile to WTO membership. However, most did not grasp that the average negotiated bound tariff rate was 40%, with applied rates for their products below bound rates.(24) This lack of awareness was partly due to the dearth of information provided by government, but the facts were never denied to companies had they wished to find out.

NGOs

Initially NGOs groups were uninformed about the implications of WTO membership for Vanuatu. Aspects of their analysis, based on information from European NGOs, were opposed to the interests of Vanuatu. For instance, some European NGOs were lobbying against a reduction in domestic agricultural support because it would increase unemployment. This is true for Europe, but local NGOs failed to realize that it would make Vanuatu farm products more competitive in the European market. One local NGO published an inflammatory article in the newspaper, taken from a European anti-WTO website, just before Vanuatu was due to sign the working party report.(25)

Prior to recent awareness sessions I didn’t read much about WTO matters. Before I had an opinion without reasoning. I heard everyone else talking about the WTO … But now I also have other views about the WTO. I know that a country like Vanuatu can have a say on any issue.(26)

With an increase in awareness about the WTO after 2001, NGOs have been able to tailor their analysis to the domestic context. A VANGO representative has attended several domestic and overseas WTO workshops and distributed local literature on the WTO to members. Most NGOs, however, remain sceptical about WTO entry.

The media

At the time two newspapers, the Trading Post and the Port Vila Presse, were published three times a week. Both played a key role in forming attitudes towards the WTO. The expatriate editor of the Trading Post (now the Daily Post) has opposed WTO membership in the belief that it would increase unemployment. The newspapers were purportedly motivated by sales and had a minimal political agenda — both were owned by foreign investors.

A number of articles reprinted from foreign publications served to spread misperceptions about the WTO, although a publicity campaign by the Department of Trade is now increasing awareness.(27)

The New Zealand and Australian High Commissions

Australian and New Zealand diplomats based in Port Vila intervened during accession as part of their close donor relationship. Both countries, however, have major economic and political interests in the Pacific. Vanuatu officials found it difficult to separate technical assistance from self-interest. This was reflected in the marked difference between the roles of the respective development agencies — AusAID and the then New Zealand Overseas Development Agency — and their departments of trade.

I remember walking into negotiations in Canberra thinking we were talking to friends, when suddenly we were hit by a barrage of aggressive negotiating demands. We had no negotiating position worked out beforehand.(28)

Correspondence indicates that Australia and New Zealand had specific demands during Vanuatu’s accession, including, as expected from members of the Cairns group, opposition to agricultural export subsidies.(29) The dual role of these countries as both donors and demandeurs undermined the final outcome.

 
 

III. Challenges faced and the outcome    back to top

Vanuatu had to make major commitments on goods and services in compensation for its inability fully to meet demands on issues such as land ownership. Although no single concession alone was responsible for the decision to suspend accession, services commitments, and in particular the liberalization of wholesale and retail trade, were among the most important.

 

Export subsidies    back to top

Vanuatu periodically used aid payments to subsidise copra exports when international prices were low. Farmers in remote outer islands have no other source of income. Article 15 of the Agreement on Agriculture excludes LDCs from reduction commitments under the agreement, and yet some WTO members argued that they would not permit new countries to join with export subsidies.(30) Vanuatu was forced to agree to discontinue its periodic export subsidies if it wanted to join the WTO. Although it never used domestic funds as subsidies, the result was an unpopular restriction on policy.

 

Goods    back to top

As a tax haven, Vanuatu derived the biggest single share of government revenue from import duties, leaving a lot at stake in goods negotiations. Again, the issue of preparedness arises. No country can consider the accession process entirely holistically because accession takes years, during which period the economic structure evolves and administrations change. Yet Vanuatu did not take an overall view, instead treating each element of negotiations discretely.

We were responding to requests and they were responding with high demands. We could not defend our positions, so we just had to give in. For example hydrocarbon oil duty rates, when converted to ad valorem from specific rates, were about 200-300%. At the moment they are well below, at 75%. We were pushed hard to convert them from specific to ad valorem and they were too high. Revenues on fuel are well below what we were collecting before.(31)

Although Vanuatu negotiated a higher average bound rate than some other acceding LDCs, this absence of an overall negotiating strategy meant that the outcome did not meet expectations. Vanuatu eventually agreed to bind 100% of tariffs, more than many developed and developing country members.(32) The agreed tariff peak of 75% was also much lower than many WTO members, as was the average tariff rate of 40%.(33)

Among other difficult areas in goods negotiations were duty rates for alcohol and tobacco, both of which generated significant revenue for the government. Owing to its small size and lack of capacity the Department of Customs and Inland Revenue has found it difficult to collect excise and value added tax.

 

Services    back to top

The leader of the negotiating team, Roy Mickey Joy, now admits that services received insufficient attention. This was for the simple reason that local officials were unfamiliar with the GATS system; it was left mostly to the temporary outside consultants.(34)

In the final schedule of commitments on services, Vanuatu agreed to include ten general areas out of a possible eleven, with fifty specific commitments.(35) These commitments are higher than those of most neighbouring economies and above the average for WTO members. The Solomon Islands included nine general areas and Fiji only two.(36)

One of the most controversial areas was wholesale and retail trade. Tonga, which was in the early stages of acceding, requested that Vanuatu make minimal commitments in these areas for fear of setting a precedent for its own accession.(37) Vanuatu officials also wanted to promote local ownership of the numerous small shops operating in the remote outer islands. In the end, however, distribution services were largely opened up.(38)

 

Land ownership    back to top

For customary and traditional reasons the Vanuatu constitution prohibits the freehold ownership of land. Leasehold lasting seventy-five years is allowed in some, mostly urban, areas. Yet the United States requested the revision of land laws. To allow freehold would have been politically suicidal and culturally unacceptable, so negotiators could not compromise on this issue. Provisions prohibiting foreign freehold ownership of land were made under the horizontal section of the services schedule of the final report.(39) As a result, significant concessions had to be made in other areas.

 

Special and differential treatment    back to top

WTO members argued that since Vanuatu was not yet a member of the WTO it could not use special and differential treatment (S&D) provisions. This has already been seen in the case of export subsidies, yet it also meant that Vanuatu could not take full advantage of transition periods for Trade-related Aspects of Intellectual Property Rights (TRIPS) or customs valuation.(40) Negotiators found it difficult to understand why they could not make full use of these sources of flexibility.

The decision on the accession of LDCs adopted by the WTO General Council on 10 December 2002 was partly a response to Vanuatu’s predicament, both as a capacity-constrained country experiencing difficulties in negotiations and in its inability to take advantage of S&D.(41)

Document WT/L/508 recommends that ‘WTO members shall exercise restraint in seeking concessions and commitments on trade in goods and services from acceding LDCs, taking into account the levels of concessions and commitments undertaken by existing WTO LDCs’ members.’ It allows acceding LDCs to take advantage of special and differential treatment, streamlines the accession process and improves access to technical assistance and capacity-building.

 
 

IV. Lessons for others    back to top

Coping with limited capacity

The WTO accession process was too onerous and power-based for a small, capacity-constrained country. Vanuatu officials were forced to make concessions that politicians were not prepared to sustain in the long run and which were greater than many developed and developing WTO members. This is in the interests neither of WTO members in general nor of Vanuatu.

Whatever degree of training and capacity-building assistance is provided, and however high the quality, small countries and many LDCs will always struggle to negotiate effectively with big players. Not only do small countries and some LDCs simply lack manpower, but even when fully trained officials often move jobs. Out of Vanuatu’s original five-member WTO team, three have now taken up new positions. This means that negotiating capacity is little better than at the start of accession in 1995.

The accession of Nepal and the finalization of Cambodia’s working party report in 2003 show that LDCs have negotiated with varying degrees of success, and yet the outcomes showed limited true flexibility, for example on telecommunications, audiovisual and wholesale and retail.(42)

Despite the 2002 General Council decision on LDCs, ‘There is a continued need for clear, objective rules and disciplines for accession negotiations.’(43)

A set of basic rules and disciplines would help overcome capacity limitations. These rules could — at least — lay down fixed transition periods for adoption of the TRIPS, Customs Valuation and sanitary and phytosanitary measures (SPS) agreements; suggest guidelines on import tariff reduction commitments; and put in place maximum required service-sector commitments.

Of course some room for manoeuvre is required, and there can be no blueprint for accession. However, in reality the existing procedure allows limited flexibility because of the standard demands of big players. Most local players involved with Vanuatu’s accession believe that excluding certain issues from negotiations would improve the overall outcome.

 

Using international resources    back to top

Most local players agree that technical assistance was vital. The Pacific Islands Forum Secretariat consultants had both prior experience of the WTO and local knowledge, a combination which was particularly important in the case of land laws. A key lesson here is that technical assistants are more help if they have country or regional experience.

Since 2001 Vanuatu has been able to take better advantage of technical assistance. The increase in awareness has allowed key officials to take a step back from the nitty-gritty, looking instead at the overall costs and benefits.

Government officers have attended many overseas training courses organised by the WTO, UN agencies and others. However, it is important to ensure that training is targeted at the appropriate personnel. In a low-wage country, per diems comprise a significant incentive, even if the training is not directly relevant.(44) Overseas trips are often distributed as bonuses to favoured staff.

The only obvious way around this problem is for international agencies to establish contact with ministries other than the WTO contact point and to target training at officials with relevant responsibilities. This may cost more, but it would be better to conduct a handful fewer training sessions and spend the resources on targeting the sessions than to train the wrong people. ‘We need to send key stakeholders on WTO workshops so that they can help the Department of Trade.’(45)

The Chamber of Commerce has suggested that members of the private sector and NGOs should have attended awareness seminars at an early stage. This would have prevented misunderstandings about the WTO and enabled tailoring of analysis and strategy to the local context.

A lack of understanding among politicians also hindered Vanuatu’s accession. A suggestion is that parliamentarians involved with the productive sectors — trade, finance, industry and tourism — should attend more training seminars on the WTO.

Training sessions must also be customized to local circumstances. General awareness of WTO rules is only half of the story; it is also crucial for people to understand the implications for their own country. It would make sense for any training seminar to involve in-depth prior country research, good-quality regional consultants and knowledgeable country officials.

Often Vanuatu trainees did not find it relevant to analyze in detail the legal meaning of individual WTO agreements or articles — the sort of scrutiny that happens in Geneva; more important was a basic understanding of how the WTO agreements would affect the country and region.

 

Consultation and transparency    back to top

A problem mentioned by almost every player involved in Vanuatu’s accession was the lack of consultation: ‘there was minimal consultation with or information provided to civil society, government and NGOs’.(46) The reasons were twofold: first, officials were simply stretched too thin. They did not have the time or resources for adequate consultation. Second, there was simply not enough understanding that accession must be based on the true interests of the country rather than the desires of government officials.

Politicians must also be briefed regularly, even if the news is bad. The Minister of Trade found it easy to withdraw from accession because there was so little domestic ownership or understanding of the issues.

Consultation must take two forms: first, individual talks aimed at determining private views, and second, frequent national seminars aimed at stimulating debate and arriving at an overall viewpoint. The former type of consultation focuses more on deciding the content of negotiating proposals; the latter aims mostly to create a sense of public ownership. If local players feel that they have been consulted, they are more likely to commit to any final outcome even if they disagree with it.

Since 2001 Vanuatu has created an inter-departmental WTO committee chaired by the Environment Unit. This involves key government and NGO players and ensures that the process does not revolve entirely around the Department of Trade.

Consultations, however, do not mean that all views can be accommodated. It is likely, for example, that some NGOs will disagree with companies. As seen in Vanuatu’s goods negotiations, there was no aggregated strategy. This was the result partly of a lack of strong leadership — someone needs to say ‘no’ to particular demands, which is often culturally difficult in Pacific countries. There must come a time when a small group of officials, or a politician, finalizes strategy. A lack of domestic direction in Vanuatu’s accession allowed other players to dictate proceedings.

 

Trade negotiations strategy    back to top

Negotiations strategy is a large area with a significant literature, and it is difficult to say much in a few words. However it deserves mention because it is one of the areas in which Vanuatu’s accession displayed the most weakness.

The main problem was that there was no overall plan. Negotiators had not worked out a position in advance. For example, there was no development of an ideal-case, expected and worst-case scenario, either for the overall outcome of accession or for individual discussions. Negotiators had not prioritized issues. There was little attempt to quantify the impact of changes other than to recognize the importance of tariff cuts for government revenue. ‘There was very, very little preparation done. In terms of opening up the economy, which affected revenue, we were under-prepared.’(47)

As has been discussed in section 3, an overall strategy is difficult when policy is unstable, the economy is changing and negotiations have few obvious parameters. However, even if strategy alters with every new administration or change in economic structure, it is better than no strategy at all.

Because most officials had only previously negotiated with co-operative neighbouring Melanesian countries, they did not appreciate the self-interested nature of international negotiations. It is a very basic point, but working out the agenda of the other party in advance is of paramount importance. Research on the local and foreign economies is vital, including the development of accurate data. Training on negotiations would be useful: ‘There are skills involved — the theoretical aspects of negotiations can be studied in behavioural sciences, or in negotiating skills training in management courses.’(48)

A particular lesson which Vanuatu learnt from accession was that there is no rush. To this extent officials disagree with the current proposal by the LDC group to put in place a three-year timetable for accession. The only way in which this would work would be if objective rules were put in place as suggested under ‘Coping with limited capacity’ above, and the accession procedure was mostly formal in nature rather than open to negotiation.

Acceding in three years under current circumstances would force negotiators into making hasty decisions. The range of issues that must currently be covered is too large to be covered by a small administration. Three years is not enough time for a small country to build ownership or to conduct sufficient research.

 
 

NOTES:
1.- See Comprehensive Reform Programme (1997), Port Vila: Comprehensive Reform Programme Co-ordination Office. back to text
2.- Ibid. back to text
3.- Department of Finance and Economic Management. back to text
4.- Department of Statistics; population is around 200,000 and GDP approximately US$230 million. back to text
5.- Department of Trade, Industry and Investment. back to text
6.- Vanuatu Investment Promotion Authority. back to text
7.- Department of Finance and Economic Management. back to text
8.- Interview with Roy Mickey Joy, Director of Trade, Industry and Investment. back to text
9.- WT/ACC/VUT/14. back to text
10.- Interview with unnamed senior government official, 2004. back to text
11.- Interview with Timothy Sisi, former Assistant Collector, Department of Customs and Inland Revenue, now Principal Trade Officer, Department of Trade, Industry and Investment. back to text
12.- Source for all figures here: Department of Trade, Industry and Investment. back to text
13.- Author’s calculations. back to text
14.- R. Grynberg and R. M. Joy (2000), ‘The Accession of Vanuatu to the WTO’, Journal of World Trade 34 (6), pp. 159-73. back to text
15.- Ibid., p. 172. back to text
16.- See also J. D. Salong (1998), ‘Reform or Recolonization: Vanuatu’s Comprehensive Reform Programme under the Microscope’, Tok Blong Pasifik, March/June 1998. back to text
17.- Parliament library. back to text
18.- Interview with Dickinson Tevi, Vanuatu Association of NGOs. back to text
19.- Department of Trade files. back to text
20.- Interview with Sisi. back to text
21.- Interview with Sowany Joseph, Principal Trade and Investment officer, Port Vila Chamber of Commerce. back to text
22.- Department of Finance and Economic Management. back to text
23.- ‘MSG Trade Negotiators Agree to Re-impose Protective Customs Tariff’, Vanuatu Trading Post, October 2002. back to text
24.- See WT/ACC/VUT/13/Add.1. back to text
25.- Port Vila Presse, 2001. back to text
26.- Interview with Tevi. back to text
27.- See, e.g., ‘Speak Your Mind on the World Trade Organization’, Daily Post, 24 Aug. 2003; ‘Vanuatu Restarts WTO Negotiations’, Daily Post, 6 May 2004. back to text
28.- Interview with Joy. back to text
29.- Department of Trade files. back to text
30.- Grynberg and Joy (2000), pp. 166-7. back to text
31.- Interview with Sisi. back to text
32.- For instance Australia has bound only 95% of tariffs and Cameroon 13.3% of tariffs. back to text
33.- Egypt, e.g., has a peak tariff of 3,000% on agricultural goods and the United States 350%. The Maldives has an average bound rate of 300%. back to text
34.- Confirmed in interviews with the Director of Trade and Principal Trade Officer. back to text
35.- WT/ACC/VUT/13/Add.2. back to text
36.- Grynberg and Joy (2000), p. 170. back to text
37.- Discussion with temporary consultant. back to text
38.- WT/ACC/VUT/13/Add.2. back to text
39.- Ibid. back to text
40.- Vanuatu was allowed two years to adopt these agreements, while Cambodia and Nepal were allowed three years or more. back to text
41.- WT/L/508; This has been confirmed in informal conversations with officials from the WTO Secretariat. back to text
42.- See, e.g., the working party report of Nepal, WT/ACC/NPL/16. back to text
43.- UNCTAD (2004), The Least-Developed Country Report 2004, Geneva and New York: United Nations, p. 63. back to text
44.- A middle-ranking Vanuatu government officer earns VT 1.1 million a year, about US$10,000. An average WTO per diem for a one-week course is therefore about 65% of the monthly salary. back to text
45.- Interview with Joseph. back to text
46.- Interview with Roy. back to text
47.- Ibid. back to text
48.- Former Director of Customs. back to text
 

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* Overseas Development Institute, London.