Government of the Federated States of Micronesia

National Trade Facilitation Committee (NTFC) holds its 5th Meeting on Trade and Trade-related Matters in Palikir

Palikir, Pohnpei (FSM Information Services): April 24, 2012 - The fifth meeting of the National Trade Facilitation Committee (NTFC) was held in Palikir, Pohnpei on April 17-18, 2012. In attendance were Vice President and Chairman of the NTFC, the Honorable Alik L. Alik, former Vice President Redley Killion, Secretary Marion Henry of the FSM Department of Resources and Development (R&D), representatives from the State and National governments, private sector, and relevant Non-Government Organizations (NGO). The Chairmanship of the meeting was deferred and the meeting unanimously voted for former Vice President Killion as Chair.

The objective of the meeting was to consider two main issues: a) the Trade in Services (TIS) Protocol to the Pacific Island Countries Trade Agreement (PICTA), with a focus on the final draft legal text and FSM's final draft Schedule of Commitments and (b) the negotiations for the Economic Partnership Agreement (EPA) between Pacific African Caribbean Pacific (ACP) States (PACPS) and the European Union (EU), focusing on options available to the FSM for the continuation of the negotiations.

The opening formalities were presided over by the Vice President. In his introductory remarks, Vice President Alik welcomed the participants and thanked them for availing themselves for the meeting. He reiterated the important role that trade and investment could play for the FSM's economy, in light of the declining and eventual expiration of the financial provisions of the Compact. In this regard, he specifically highlighted that the Trade in Services Protocol to the PICTA and the EPA could potentially contribute to the sustainable growth of FSM's economy, by providing opportunities for the FSM to increase its participation in sub-regional and regional trade in services, and to take advantage of the duty free and quota free access to the European market, especially for fisheries products and other niche products. Vice President Alik also reiterated the National Government's firm support of the private sector through the FSM Association of Chamber of Commerce (FSMACC) as shown by the FY2013 budget submission and financial support for the past two years; and provided an update on the status of the tax reform, which is also very important to FSM's trade and the economy as a whole.

The NTFC was provided with an overview of the negotiations for the Trade in Services Protocol to PICTA, which was concluded in February 2012 in Nadi, Fiji and were briefed on the key elements of the Protocol, in line with current domestic laws and regulations applicable in the FSM and FSM's international obligations, and the potential implications and changes that would need to be undertaken in order to bring the laws and regulations applicable in the FSM in compliance with the Protocol. Moreover, the Meeting reviewed the proposed commitments to be undertaken by FSM under the Trade in Services Protocol, with a focus on specificities and peculiarities for each of the FSM's jurisdictions. They also discussed the prospects for signing and ratifying the Trade in Services Protocol for FSM and noted that the Trade in Services Protocol represents a source of legal certainty and predictability for the development and expansion of future trade in services between FSM and the FICs; and that becoming a Party to the Trade in Services Protocol would provide current and potential investors interested in achieving economies of scale at the regional level to consider FSM as a possible destination. In this regard, the NTFC urged the review of the Trade in Services Protocol to be completed by the responsible Departments by the end of May 2012 to facilitate the authentication, signature and ratification of the Trade in Services Protocol to PICTA.

With regards to the EPA negotiations, the NTFC was provided an update on the ongoing negotiations between PACPS and the EU including the recent PACP meeting in February 2012 in Nadi, Fiji, as well as the recent exchange of communications between PACPs and the EU. They were also briefed on the recent first formal trade consultations between the Freely Associated States (FAS) and the US, as required under Section 244(c) of the amended Compact, which took place in March 2012, in anticipation for the conclusion of the EPA negotiations. Furthermore, the NTFC considered options available to FSM, which includes Fisheries, Substantially All Trade (SAT) level, Development Cooperation, Most Favored Nation (MFN), and Non-Execution clause. They also discussed options for the pursuit of the EPA negotiations, focusing on the draft conditional market access offers and the merits for pursuing the iEPA or the EPA. The NTFC endorsed FSM's draft and final Market Access Offers (MAO) and directed the FSM Department of R&D to continue pursuing its current negotiating position in the EPA, and tasked the National Government, in consultation with the State governments, to identify FSM's EPA implementation needs and to prepare Aid for Trade (AfT) projects for submission at the Regional AfT Round Table Meeting. They also urged the National Government to include trade and trade-related activities as one of the priority areas in the National Indicate Program for EDF11, and reaffirmed the importance of addressing behind-the-border issues, including (Sanitary and Phytosanitary (SPS) and Technical Barriers to Trade (TBT) requirements, as well as the requirement to establish competent authorities to certify products exportable into the EU market). Finally, the NTFC reaffirmed that proactive State and National Government policies aiming at attracting investments and improving the Business Enabling Environment in the FSM will be crucial to take advantage of preferential market access.

For more information, please contact the Department of Resources and Development at telephone number (691) 320-5133.