Kiribati Trade Policy Framework 2017-2027

iiiTPF 2017-2027

Acronyms viForeword viiiExecutive Summary ix1. Introduction 11.1 Vision 1

1.2 Mission Statement 1

1.3 Objectives 1

1.4 Guiding Principles 1

1.5 Scope of Trade Policy 2

2. Country and Economic Context 42.1 Country Background 4

2.2 Historical and Recent Economic

Performance 5

2.2.1 Structure of the Economy 6

2.3 Employment 6

2.4 Analysis of the Balance of Payments

and Trade 8

2.4.1 Goods Imports 8

2.4.2 Goods Exports 9

2.5 Macroeconomic Policy 10

Policy Measures 11

3. Trade and Sustainable Development 133.1 Trade and Health:

Ensuring a Healthier Kiribati 14

Policy Measures 14

3.2 Inclusive Trade: Spreading the

BenefitsofTradetoAlli-Kiribati 15

Policy Measures 16

3.3 Trade and Environmental Sustainability 17

Policy Measures 17

4. Trade Policy Instruments 194.1 Restrictions on Imports 19

4.2 Import Duties and Duty Exemptions 19

4.3 Fees and Permits for Import and Export 19

Policy Measures 20

4.4 Restrictions and Taxes on Exports 20

4.5 Other Trade Policy Instruments:

Anti-dumping,Countervailing

Measures and Safeguards 20

4.6 KeyTrade-RelatedLegislation 20

5. Securing Kiribati’s Place in the Global Economy 23

5.1 Overall Objectives for Kiribati’s Trade

Engagement with the World 24

5.1.1 Expanding Market Access for

Kiribati-madeGoods 24

5.1.2 ExpandingMarketAccessfori-Kiribati

Workers 24

5.1.3 LookingBeyondFTAstoOther

Commercial Arrangements 24

5.2 Preferential Free Trade Arrangements and

Negotiations Currently Involving Kiribati 25

5.2.1 Generalised System of Preferences (GSP) 26

5.2.2 World Trade Organization (WTO) and

Basic International Trade Rules 26

5.2.3 Trade with the European Union 26

5.2.4 Trade with Australia and New Zealand 27

5.2.5 TradeWithinthePacificIslads 27

Policy Measures 29

6. Breaking Down Barriers to Private Sector Development in Kiribati 316.1 Overview of the Current State of

the Private Sector in Kiribati 31

Policy Measures 32

6.2 Creating the Space for the Private

Sector through Reforming State

Owned Enterprises 32

Policy Measures 32

6.3 CompanyLawandBusiness

Registration Reform 33

Policy Measures 33

6.4 Cooperative Development 33

Policy Measures 34

6.5 Investmentbyi-KiribatiatHome 34

Policy Measures 35

6.6 Encouraging Inward Investment to Kiribati

–ASimpler,QuickerSystem 35

Policy Measures 36

6.7 At the Border – Facilitating Trade 36

Policy Measures 37

6.8 International and Domestic Shipping –

Consistent,ReliableandCost-effective

Shipping 37

6.8.1 International Shipping 38

6.8.2 Domestic Shipping 38

Policy Measures 38

6.9 AirServices–ImprovingtheFrequency,

ReliabilityandAffordabilityofInternational

and Domestic Freight and Travel 39

Policy Measures 40

6.10 ICTE-CommerceandTrade 40

Policy Measures 40

Contents

iv vTPF 2017-2027 TPF 2017-2027

6.11 Competition and Consumer Protection 40

Policy Measures 41

6.12 StandardsandQualityInfrastructure

System 41

Policy Measures 41

6.13 Intellectual Property 42

Policy Measures 42

6.14 Land 42

Policy Measures 43

7. Linkages to Key Productive Sector Policies and Supply Capacity 457.1 Agriculture 45

Policy Measures 46

7.2 Fisheries 46

Policy Measures 49

7.3 Tourism 49

Policy Measures 51

7.4 LabourMobility 51

Policy Measures 53

7.5 Deep Seabed Mineral Resources 53

Policy Measures 54

7.6 Strengthening Domestic Supply Chains 54

Policy Measures 55

8 Implementation, Institutions and Aid for Trade 578.1 Timeframe for Implementation 57

8.2 Implementation of the Trade Policy

FrameworkattheBroadLevel 57

8.3 TPF Implementation Matrix 58

8.4 Institutional Framework for Coordinating

and Monitoring Implementation 58

8.5 Resourcing TPF Implementation

through Aid for Trade 59

Policy Measures 61

Annex 1: Trade Policy Framework

Implementation Plan 63

List of Figures

Figure 1.1: Map of the Trade Policy Framework and Relationship to the KDP 2

Figure 2.1: Map of Kiribati 4

Figure2.2:Longtermeconomicgrowthperformanceof selected PICs (in constant 2010 USD) 5

Figure 2.2.1: Composition of GDP by Industry 2014 6

Figure 2.3: Public and Private Sector KPF Contributors,Kiribati,2009-2016 7

Figure2.4:ImportsandExports,1974to2016 8

Figure2.4.1:ShareofImportedGoods,2006-10 8

Figure2.4.2:Avg.WeightedTariffRatesinFICs,2015 9

Figure2.4.3:Exports1996-2016 10

Figure2.5:Revenue,Expenditure,DeficitsandSurpluses,Kiribati,2007-2016 11

Figure3.1:OverallFrameworkforHowTrade,definedbroadlyas‘Exchanges’or‘Transactions’betweenindividuals,contributestoDevelopment 13

Figure3.2.1:Female(15+)LabourForceParticipation Rate in Sepected PICs 15

Figure3.2.2:Unemployment:work-seekersas percentage of labour force 15

Figure 3.2.3: Total Employment by Sector andGender,selectedsectors(with gender ratio by sector in percent) 15

Figure 3.2.4: Employment Type: South Tarawa and Other Areas 16

Figure 5.1: Kiribati’s Broad Objectives from Trade-relatedPartnershipsandAgreements 23

Figure 6.1: Number of Registered Businesses per Island 31

Figure6.1.1:FormalSectorEmployment,2009-2016 32

Figure6.5:Investment-GrowthCycle 34

Figure 6.6: FDI Applications 35

Figure 7.1: Trends in Exports of CoconutProducts,AUD‘000’(2004-2014) 45

Figure 7.2: Kiribati’s Exclusive Economic Zone 47

Figure 7.3: Visitor Arrivals to Kiribati by Purpose,2000-15 50

Figure7.4:Seamen’sRemittances,2000to2016 52

Figure 8.1: Institutional Structure for Implementation of the TPF 59List of Tables

Table 2.1: 2015 Census Data on Employment in Kiribati 7

Table4.1:KeyTrade-relatedLegislation 20

Table 5.1: Summary of Kiribati’s Market Access Arrangements with the World 25

Table 5.2: Policy Measures on Trade Negotiations and Agreements 29

Table 8.1: AfTActivitybyDonor(2011-15,total) 60

vi viiTPF 2017-2027 TPF 2017-2027

AcronymsACPS African,CaribbeanandPacific

States

ADB Asian Development Bank

AfT Aid for Trade

AKL AirKiribatiLimited

ALD AgricultureandLivestockDivision

APTC Australia–PacificTechnicalCollege

ATHKL Amalgamated Telecom Holdings KiribatiLimited

AUD Australian Dollar

BPC Business Promotion Centre

BRC Business Regulatory Centre

CCFZ Clarion Clipperton Fracture Zone

CITES Convention on International Trade in Endangered Species

CLPB CentralLandPlanningBoard

CPSC CentralPacificShippingCommission

CSDS Coconut Sector Development Strategy

CSOs Civil Society Organisations

DBK Development Bank of Kiribati

DFQF DutyFreeandQuotaFree

DSM Deep Sea Mining

DTIS Diagnostic Trade Integration Study

DWFNs Distant Water Fishing Nations

EBA Everything But Arms

EEZ Exclusive Economic Zone

EIA Environmental Impact Assessment

EIF Enhanced Integrated Framework

EPA Economic Partnership Agreement

ERP Economic Reform Programme

EU European Union

FAO Food and Agriculture Organisation

FIC Foreign Investment Commission

FICs Forum Island Countries

FDI Foreign Direct Investment

FFA Forum Fisheries Agency

FSM Federated States of Micronesia

FTA Free Trade Agreement

GDP Gross Domestic Product

GEF Global Environment Facility

GLUP GeneralLandUsePlan

GNI Gross National Income

GoK Government of Kiribati

GSP Generalised System of Preferences

HACCP Hazard Action Critical Control Point

HDI Human Development Inde

HS Harmonised System

H&S Hub and Spokes Programme

ICT Information and Communication Technology

IMF International Monetary Fund

IP Intellectual Property

ISO International Standards Organisation

IUU Illegal,UnreportedandUnregulated

KCCI Kiribati Chamber of Commerce and Industry

KCMCL KiribatiCopraMillLimited

KCS Kiribati Customs Service

KDP Kiribati Development Plan

KIEP Kiribati Integrated Environment Policy

KIT Kiribati Institute of Technology

KFL KiribatiFishLimited

KNSL KiribatiNationalShippingLine

KNTO KiribatiNationalTourismOffice

KPA Kiribati Ports Authority

KPF Kiribati Provident Fund

KSSL KiribatiShippingServicesLimited

LDC LeastDevelopedCountry

LPIDS LineandPhoenixIslandsDevelopment Strategy

MCIC MinistryofCommerce,Industryand Cooperatives

MICTTD MinistryofInformation,Communication,

Transport and Tourism Development

MEA Multilateral Environmental Agreement

MELAD MinistryofEnvironment,LandsandAgricultural Development

MFED Ministry of Finance and Economic Development

MFMRD Ministry of Fisheries and Marine Resources Development

MFN Most Favoured Nation

MHMS Ministry of Health and Medical Services

MIA MinistryofInternalAffairs

MEHR Ministry of Employment and Human Resource.

MLPID MinistryofLineandPhoenixIslands Development

MYWSSA MinistryofYouth,Women,SportsandSocialAffairs

MSC Marine Stewardship Council

MSG Melanesian Spearhead Group

MTC Marine Training Centre

MTEC Micronesian Trade and Economic Community

NCDs Non-CommunicableDiseases

NFP National Fisheries Policy

NIPS National Intellectual Property Strategy

NLMP NationalLabourMobilityPolicy

NMTP National Maritime Transport Policy

NQP NationalQualityPolicy

NSO NationalStatisticsOffice

NSC National Shipping Council

NTB Non-TariffBarriers

NTAC National Trade Advisory Committee

NZ New Zealand

OCO Oceania Customs Organisation

ODA OfficialDevelopmentAssistance

OECD Organisation for Economic Co-operationandDevelopment

PAC PacificAccessCategory

PACER-Plus PacificAgreementonCloserEconomic Relations Plus

PACPS PacificAfrican,CaribbeanandPacificState

PCA Post Clearance Audit

PICs PacificIslandCountries

PICTA PacificIslandCountriesTradeAgreement

PIFS PacificIslandsForumSecretariat

PIPSO PacificIslandsPrivateSectorOrganisation

PNA Parties to the Nauru Agreement

PPP Public Private Partnership

PSDI Private Sector Development Initiative

PSDS Private Sector Development Strategy

PT&I PacificTradeandInvest

QIS QualityInfrastructureSystem

RERF Revenue Equalisation Reserve Fund

RoO Rules of Origin

RMI Republic of the Marshall Islands

RTA Regional Trade Agreement

RSE Recognised Seasonal Employer

SBM Seabed Minerals

SDGs Sustainable Development Goals

SIDS Small Island Developing State

SIS Small Island State

SMEs Small and Medium Sized Enterprises

SOEs State Owned Enterprises

SOEMAU State Owned Enterprise Monitoring and Advisory Unit

SPC SecretariatofthePacificCommunity

SPMS SouthPacificMarineServices

SPS SanitaryandPhyto-sanitaryMeasures

SPARTECA SouthPacificRegionalTradeandEconomic Cooperation Agreement

SWF Sovereign Wealth Fund

SWP Seasonal Worker Programme

TBT Technical Barriers to Trade

TFA Trade Facilitation Agreement

TK Traditional Knowledge

TPF Trade Policy Framework

TTM Taiwan Technical Mission

TVET Technical and Vocational Education and Training

UN United Nations

UNCLOS United Nations Convention on the LawoftheSea

UNDP United Nations Development Programme

USD United States Dollar

USP UniversityoftheSouthPacific

VAT Value Added Tax

VDS Vessel Day Scheme

WCO World Customs Organisation

WHO World Health Organisation

WIPO World Intellectual Property Organization

WTO World Trade Organization

viii ixTPF 2017-2027 TPF 2017-2027

ForewordIamdelightedtopresentthefirstTradePolicyFramework(TPF)forKiribati.TheTPFprovidesaclearcodificationofthe Government’s strategy towards using trade as a tool for creating wealth and prosperity for our people.

TheTPFisinlinewiththedevelopmentaspirationsinTeMotinnano,KV20andtheKiribatiDevelopmentPlan(2016-2019)whichseektopromoteeconomicgrowth,inclusivesustainabledevelopmentandpovertyreductionthroughthedevelopmentoftheprivatesector.Thepolicyisanexampleofaplanned,predictableandevidence-basedpolicyinformedby various consultations undertaken by theMinistry of Commerce, Industry andCooperatives (MCIC)withtechnicalandfinancialassistancefromtheEnhancedIntegratedFramework(EIF)throughtheUnitedNationsDevelopment Programme (UNDP).

The TPF has benefited from a series of consultations conducted fromNovember 2016with the private sector,GovernmentMinistries, Agencies andCivil Society. The consultations included a successful validationworkshophostedinJune2017,followedbyconsultationswiththeNationalTradeAdvisoryCommittee(NTAC)wherethefinaldraft of the TPF was discussed.

TheTPFservesseveral importantpurposes.Firstly,thedocumentpullstogetherrecentpoliciesandstrategiestocreate a primary umbrella policy for the Government with regards to key policy measures that would foster and stimulate the development of trade.

Thisdocumentdoesnotobviatetherelevantrolesofthealreadyexistingpolicies,suchastheNationalIntellectualPropertyStrategy (NIPS), theNationalFisheriesPolicy (NFP), theNationalTransportandMaritimePolicy (NTMP),National Quality Policy (NQP) and National Labour Migration Policy (NLMP). Instead, the TPF selectively pullsthesedocumentstogetherintooneoverarchingframework,allowingimplementationtobeeasilyconductedandmonitored.Secondly,thedocumentfillsavitalgapinoutliningKiribati’sstrategywithregardstoimportanttradepolicy issues which are currently not adequately covered in the existing Government Policy.

The TPF will serve as a living document and will be amended as policy conditions change. The Government will make annualassessmentsontheprogressoftheTPFand,fromtimetotime,willmakeamendmentstoensurethatthecountry’s trade policy continues to deliver the best development choices for the citizens of Kiribati.

Throughthe implementationof thisTradePolicy,weseek to foster theright tradeand investmentenvironmentfor thedevelopmentof theeconomyand importantly, thegrowthandpromotionof thekeyproductivesectorssuchasFisheries,CoconutsandTourism.TheGovernmentintendstodevelopthesesectorsthroughtargetedandinnovativepolicieswhichaddresskeyconstraintstogrowth.Inthisway,wecanfosteranewanddynamicprivatesector that creates wealth and prosperity for all citizens of Kiribati.

Iwouldliketoendbythankingallthepartners,Governmentministries,theprivatesectorandcivilsocietymemberswho have contributed constructively in the development process and helped to bring this document to completion.

IwouldliketogiveparticularthankstotheEIFSecretariatandUNDPforfinancialsupporttoallowtheInternationalConsultant,Mr.DannyLuitoundertaketheTPFassignment.Iwouldalsoliketoacknowledgethetechnicalsupportof theCommonwealthSecretariat throughtheNationalTradeAdvisor,Mr.SamsonOdhiamboAwino,undertheHubandSpokesprogramme,towardstheformulationofthisTPF,aswellasMCICstaff,inparticulartheDirectorforBusinessPromotionCentre(DBPC)andstaffoftheTradePromotionDivisionatBPC.Withoutsuchcontinuoussupport,thisdocumentcouldnothavebecomeafinishedproduct.

Te Mauri (Health) Te Raoi (Peace) ao Te Tabomoa (Prosperity).

_______________________________________

Hon. Atarake NataaraMinisterofCommerce,IndustryandCooperatives

Executive SummaryTheTPFisthefirstintegratedtradepolicydocumentontraderelatedmattersinKiribati.Thepolicyfillsanimportantgapinthecountry’soverallpolicyframeworkforeconomictransformation,whichhassofarreliedonahorizontaltreatmentoftradeissuescoupledwithsomeselectedtrade-specificmeasures.Itsetsouttheimportanceoftradefor Kiribati as well as the overall mechanisms through which Kiribati can use trade as a tool for inclusive and sustainable development in line with national development strategies.

The TPF in the Overall Development strategy: The TPF is one of the national economic strategies and policies that seeks to create wealth and prosperity. The role of the TPF is to ensure that various trade related policies – including but not limited toNational Quality Policy, National Fisheries Policy, National LabourMigration Policy,Seabed Minerals Policy etc. – are not contradicting each other in regards to the national trade development agenda. Inaddition,thePolicyalsoaddressescertaintradepolicyissueswhicharenotpartoftheotherspecificpoliciesorstrategies such as the participation of Kiribati in the global economy through regional trade agreements like PACER Plus,PICTA,SPARTECA,andEPA.

The TPF promotes a balanced relationship between integration in the global economy and sustainable development. ItalsopromotesamoretransparentandpredictablebusinessenvironmentandseekstointegrateSMEs,women,youth and the disabled – especially those living on the outer Islands – into the national development agenda.

Insummary,theTPFseeksto:a) SetandredefineGovernmentPolicyrelatingtointernationalanddomestictrade;b) Design appropriate complementary measures to improve the business regulatory and macroeconomic

environment;c) Increaseinvestmentininfrastructuretosupporttradedevelopment;d) Improvecoordinationofinstitutionsresponsibleforpromotingandregulatingtrade;e) ImprovetheinstitutionalarrangementsforimplementingthetradepolicyagendainKiribati;

Constraints to be addressed in the TPF: In order to achieve the objective of TPF and reap the development benefitsofgrowth in theprivate sectorand improved tradeperformance,Kiribatiwillhave toaddressmultipledomesticconstraints forfirmsto invest,developnew industries,produceandcontribute to thedevelopmentoftrade.WhileGovernmenthasbeen implementing variousmeasures to support thedevelopmentof inter-islandtrade,domestictradeforlocalproductsisstillconstrainedbylimitedsupplycapacityandproducermarketlinkages,poormarketinginfrastructureandpoorinter-Islandconnectivity.

Other constraints to tradeandprivatedevelopment include theexistenceofoutdatedbusiness laws,whichareincompatible with the current private sector and trade development regime, thus negatively impacting on theinflowofForeignDirectInvestment(FDI).Assuch,veryfewbusinessesparticipateinproductivesectorslikefisheriesand tourism on the outer Islands. Low participation in the productive sector implies limited supply capacity.Other sectors like Seabed Mining still remain unexploited. Exports are mainly concentrated on only a few primary productsandfewdestinationmarkets.Kiribatistill facesmarketaccesschallenges linkedtoProductQualityandTechnicalStandardsforgoodsandservices.ThecostofdoingbusinessinKiribati isrelativelyhigh,comparedtosimilareconomiesinthePacific.

Addressing the Constraints: The constraints will be addressed through various strategic policy measures. In order to establishaframeworkforimplementation,monitoringandevaluationoftheTPFundereachofthePolicyareas,thePolicysetsoutarationale,underlyingmeasureswithineachofthedesignatedPolicyareas,performanceindicatorsand targets.ThePolicyattachesgreat importance to thepromotionof social inclusion,genderequalityand theavoidance of negative impacts on environment.

ImplementationPrinciples:Inordertoensurethatthetradepolicyiscoherentandconsistentwithotherpolicies,the responsibility of TPF implementation will rest with the Government line Ministry which has the mandate for each specificpolicy,andmonitoringofprogressandconsistencyfortheTPFwillbethepurviewoftheNationalTradeAdvisoryCommittee(NTAC)incollaborationwiththeMinistryofCommerce,IndustryandCooperatives.Inthisway,the TPF avoids duplication of work while ensuring coherence of the policy framework. The underlying principle is to mainstream trade policy objectives across Kiribati’s Policies.

x 1TPF 2017-2027 TPF 2017-2027

1.1: Vision

The20-yeardevelopmentblueprint(KV20)seekstofosterinclusivetradeandprivatesectordevelopmentthroughfisheries and tourism as the key productive sectors among other existing sectors. The KV20 aims to increaseexports, the volumeof domestic trade and inflowof ForeignDirect Investment (FDI). TheKV20 aims to ensuremacroeconomic sustainability by developing sustainable tourism, inclusive sustainable trade and private sectordevelopment,promotingsustainablefisheriesandmarinedevelopment,aswellas investing inhumancapitaltoenhance productivity and employment.

KiribatiDevelopmentPlan (KDP) 2016-2019also seeks topromotebetter education, betterhealth and inclusivesustainable economic growth and development. The KDP seeks to foster equitable development in the context of geographyandatthesametimeaddresstheplightofmarginalisedgroupsincludingwomen,youthanddisabledpeople.

BearinginmindthevisionofKV20andthemissionofKDP,theTPFsetsoutthevisionoftheGovernmentofKiribation how trade can be used as a fundamental tool for achieving the KV20 and the KDP. The vision of the Trade Policy is:

1.2: Mission Statement

The overall mission of the Policy is to facilitate the transformation of Kiribati into a competitive economy and strengthen its participation in both domestic and international trade with the ultimate objective of creating wealth and prosperity.

1.3: Objectives

The TPF mission will be achieved through the following objectives:• SettingandredefiningGovernmentpolicyrelatingtointernationalanddomestictrade;• Designing appropriate complementary measures to improve the business regulatory and macroeconomic

environment;• Increasinginvestmentininfrastructuretosupporttradedevelopment;• Improvingcoordinationofinstitutionsresponsibleforpromotingandregulatingtrade;• ImprovingtheinstitutionalarrangementsforimplementingthetradepolicyagendainKiribati;and• Mainstreaming trade into national development strategies and sector policies.

1.4: Guiding Principles

The TPF is premised on the following guiding principles:• Strengtheningthecapacitytotradeinlocalproduceandfosterinternationaltrade;• Mainstreamingtradeintonationaldevelopmentstrategiesandsectorpolicies;• Coordinatingtheapproachtotheformulationandimplementationoftradepolicies;• Conformingwiththecountry’sobligationsinregionalandbilateraltradeagreements;• Creatingopportunitiesforall,includingwomen,youth,disabledpeopleandthoseontheouterislands;• Creating an enabling environment to support the development of the private sector through increased

domesticandForeignInvestment;and• Creating value chain linkages to support the development of national and international trade in goods and

services.

1. Introduction

A dynamic and competitive economy for equitable distribution of wealth and prosperity

2 3TPF 2017-2027 TPF 2017-2027

1.5: Scope of Trade Policy

TheTPFisbroad-rangingandthematicinitsscope,giventhattradeisacomplexcross-cuttingactivity.TheTPFfirstlyexaminesthetradeandeconomicsituation(Section2)andthenexaminessomekeytradedimensions,includingtherelationshipbetweentradeandsustainabledevelopment,health,inclusivegrowthandenvironmentalsustainability(Section 3). It further analyses the key trade policy instruments (Section 4). Section 5 of the TPF deals with Kiribati’s tradingpartnershipswiththerestoftheworld,includingcurrentnegotiationsandothercommercialarrangements.Section6oftheTPFlooksatanumberofkeyenablersoftradeincludingtradefacilitationandborderprocesses,international anddomestic transport, local and foreign investment aswell as quality standards and intellectualproperty regimes such as trademarks. Section 7 details the linkages between trade policies in key economic sectors includingfisheries,agriculture,tourism, labourmobilityandtheblueorocean-basedeconomy.Finally,Section8looks at the implementation and institutional framework for ensuring that the TPF delivers on its goals.

Figure 1.1 Map of the Trade Policy Framework and Relationship to the KDP

Kiribati Development Plan

Health GovernanceHuman

ResourcesDev’t

Economic Growth & Poverty

Reduction

Infrastructure Environment

Kiribati Twenty Year Vision (KV20)

Trade & Sustainable

Development

Trade Dimensions (TPF chapter 2,3)

Economic Sectors (TPF chapter 7)

Trade Enablers (TPF chapter 6)

Trade, Competitiveness& Private Sector

Development

Trade, Competitiveness& Private Sector

Development

Trade & Sustainable

Performance

Facilitating Trade at the

Border

Foreign Investment

Quality Standards

Intellectual Property

Other (Finance, etc.)

Transport Linkages

Domestic Investment

Trade, Health & Consumer Protection

Trade, Health & Consumer Protection

Labour Mobility

Other (Blue Economy, etc.)

Fisheries Tourism

Trade Policy Framework

(TPF)

4 5TPF 2017-2027 TPF 2017-2027

2.1 Country Background

TheRepublicofKiribati,withapopulationof110,136(2015Census), isoneofthemost isolatedcountries intheworld.SituatedoneithersideoftheInternationalDateline,aswellasnorthandsouthoftheequator,itcomprisesof32coralatollsand1raisedatollspreadacross3.5millionsquarekilometresofocean,anareabiggerthantheCaribbeanSea.Morethan90percentofthepopulationisconcentratedintheGilbertIslands,withover50percentof those living in South Tarawa.

Figure 2.1: Map of Kiribati

Thetotal landarea isonly811squarekm.About1,480kmeastof theGilbert Islands liesthePhoenix Islands,agroup of eight largely uninhabited low-lying atolls and reef islands. Further east are the Line Islands includingKiritimati,whichisabout3,330kmfromTarawa.Kiritimatiistheworld’slargestatoll(388squarekm),accountingfor almost half of Kiribati’s land area but only about 5 per cent of the population.

Althoughthereisnoextremepoverty,Kiribatiisranked12thof14Pacificislandcountriesand137thintheworldaccording to the UNDP Human Development Index (HDI) ranking. Illnesses associated with malnutrition exist,particularly on the outer islands. While Kiribati is considered a low HIV prevalence country, it has one of thehighestHIVinfectionratespercapitainthePacificwithatotalof60HIVinfectionsfortheperiodof1991to2015.Schoolenrolment iscloseto100percent,butreportingofattendance isunreliableandtheFiguremasksothershortcomings in the education system such as survival and retention rate at primary level. Kiribati has ranked highly ontheUNEconomicVulnerabilityIndexsince1991,withascoregreaterthan70percentformostoftheseyears.

2. Country and Economic ContextKiribatifacessignificantchallengesinparticipatingininternationalvaluechainsandtheglobaleconomy.Exportsofboth goods and services are limited. Kiribati’s international competitiveness is best understood in reference to its mainchallengestoparticipatingintheglobaleconomy,whicharewell-knownandinclude:

Kiribati nevertheless enjoys several advantages, including an unspoilt and attractive natural environment, withsignificant under-exploited potential in tourism. It also has relatively large foreign reserves in the RevenueEqualisationReserve Fund (RERF), initially establishedby theUK colonial administrationprior to independence.Additional advantages include a strong traditional culture among I-Kiribati, which promotes social stability andfamilywelfare,highliteracyrates,potentialinfisheriesandlow-skilledservicesexportsandthecountry’svastoceanspace containing untapped marine resources whose commercial value has yet to be determined.

2.2 Historical and Recent Economic Performance

While somenewopportunities have begun to emerge in areas such as fisheries and labourmobility, the basicstructure and characteristics of the Kiribati economy outlined above have remained largely unchanged since 1979. Overall, thebroadmacroeconomicenvironmentfortrade inKiribatioverthe last25yearshasbeenprogressivetowardsachievingdevelopmentgoals,thoughitsrelativelyvolatileeconomicgrowthhasbeenlowerthanitspeerson average.

Figure. 2.2 depicts that the real GDP per capita has risen by 50 per cent since 1990 in Samoa but has essentially stagnatedinKiribatiatlevelssimilartothoserecordedintheearlytomid-1990s.

Figure 2.2 Long term economic growth performance of selected PICS (in constant 2010 USD)

Limited land and water supply for

commercial use

Inadquate basic infrastructure

Insufficient skills

Lack of investment and a poor business

environment

Vulnerability to climate change

Isolation from major markets and poor

connections

Small population and

lack of scale

Geographical disbursement of

population

Source: World Development Indicators

160

150

140

130

120

110

100

90

80

1990

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

Samoa

Fiji

Tuvalu

PIC avg

Vanuatu

Kiribati

6 7TPF 2017-2027 TPF 2017-2027

Inthenearfuture,economicgrowthisexpectedtobearound3percentperannum,mainlyreflectingtheimpactofmajordonorprojects.GDPperpersonin2014wasAUD1,838,whichisoneofthelowestofallPacificIslandnations.Atthesametime,thisstillputsKiribatiamongthebetteroffcountrieswithintheUnitedNationsLeastDevelopedCountry(LDC)grouping,andtheUNexpectsthatKiribatiwillgraduatefromthisgrouptobecomeaMiddleIncomeCountry by 2024.

2.2.1. Structure of the Economy

Nationalaccountsstatisticsshowthatwhileagricultureandfishingaccountfor23percentofproductioninKiribati,andmanufacturing around 4 per cent, as inmany other countries the largest share of output is generated byservices, including real estate, construction, finance, transport, wholesale and retail trade, and communication(Figure 2.2.1).

Figure 2.2.1. Composition of GDP by Industry 2014

Source: Kiribati National Statistics Office

2.3 Employment

Table 2.1 shows that agriculture remains the largest employer in Kiribati, followed by public administration,wholesaleandretailtradeandfisheries.GenderandgeographicalaspectsofemploymentareanalysedfurtherinSection 3.

Table 2.1. 2015 Census Data on Employment in Kiribati

Source: 2015 Population Census Report. Kiribati National Statistics Office

Complementary data from the Kiribati Provident Fund (KPF) on contributors to the KPF system show that the numberofprivatesectorcontributorshasincreasedfrom2,130inJune2010to3,982inJune2016,whichdepictsariseof87percent.Thenumberofcontributorsfromthepublicsectorhoweverrosefrom6,789in2010to6,917in 2016 (Figure 2.3).

Figure 2.3: Public and Private Sector KPF Contributors, Kiribati, 2009-2016

Source: Kiribati Provident Fund

Total Men WomenAgriculture 4104 2984 1119

Public Administration 3521 2192 1329

Wholesale & Retail 3457 1749 1708

Fisheries 2708 2228 480

Education 1940 595 1345

Transport 1233 908 325

Health 977 289 688

Handicrafts 919 74 845

Construction 846 784 62

Hotels and Restaurants 659 263 396

Personal Services 646 245 399

Security Services 646 594 52

Finance & Real Estate 381 192 188

Agriculture & Fishing 23.0%

Mining&Quarrying0.3%

Manufacturing 3.9%

Electricity,Gas&Water0.3%

Construction 8.7%

Wholesale & retail trade 4.2%Hotel & Restaurants 0.5%

Transport & Storage 6.0%Communications 3.6%Financial intermediation 6.1%

Real Estate 12.5%

Business services 1.0%

Government 28.6%

Other social services 1.4%

8 9TPF 2017-2027 TPF 2017-2027

2.4 Analysis of the Balance of Payments and Trade Kiribatiisatradingnation,receivingsignificantlevelsofincomefromavarietyofsourcesandpurchasingsignificantlevels of goods and services in return. A feature of Kiribati’s overseas trade is that while Kiribati generates revenue fromabroad,thesmallsizeoftheeconomymeansthatitreliesheavilyonimportedgoodstomeet its essentialneeds.Inordertofinanceitsdevelopment needsandpayforgoodsproduceddomesticallyandoverseas,Kiribatigenerates foreign exchange revenue in a number of ways. Actual exports of goods (shown in Figure 2.4) and services aresmall.Inrecentyears,remittancesfromseafarersandworkersoverseas(e.g.ontheNewZealandRSEscheme)weregreaterthanthetotalvalueofexportssentabroad.Revenuefromfishinglicenceshasbeenakeysourceofforeignexchange,but canvary substantially fromyear to yeardue to themigratorynatureof thefishstock. Inaddition,thelongtermsustainabilityofthefisherysectordependsonthesuccessofregionalstockconservationefforts.Inaddition,theGovernmentinpastyears,hasreliedonwithdrawalsfromtheRevenueEqualisationReserveFund(RERF)althoughthelong-termpolicyistomaintaintheRERFataconstantlevel.Overall,thetradefiguresshowthatKiribatineedstodiversifyawayfromvulnerablesourcesofforeignexchange(fishinglicencerevenues,aidandRERFincome),towardsincreasedremittancesandexportsofgoodsandservices.

Figure 2.4 Imports and Exports, 1974 to 2016

2.4.1. Goods Imports

ThevalueofimportsintoKiribatiwasAUD$118.9min2014,oraround57percentofthecountry’soveralleconomicoutput.Themainimportedgoodsarefooditems(accountingfor35percentofthetotalimportbill),followedbyfuel(25percent),machineryandtransportequipment(15percent),manufacturedgoods(11percent),beveragesandtobaccoandchemicals(Fig2.4.1).GivenKiribati’srelianceonimports,smallreductionsinthecostofimportedgoodscouldprovidegreaterbenefitsthanevenmodestincreasesinexportsfromcurrentlevels.

Figure 2.4.1: Share of Imported Goods, 2006-10

The government recognises the possible challenges and operates a number of policies to lower the cost of imports. Inthiscontext,thegovernmentimplementedtaxreformin2014whichledtotheabolitionof importdutiesandtheadoptionofVAT,reducingalltariffratestozero.KiribatiisthereforeconsideredtobeanopentradingnationinthePacific(includingAustraliaandNewZealand)alongsideHongKongasshowninFig2.4.2.Kiribatihoweverrecognises that there are further steps that can be taken to lower the cost of imports both at the border and in the economy through trade facilitation policy measures.

Overthelast15years,therehasbeenasignificantshiftinthesourceofimportedgoodsintoKiribati.Attheturnofthecentury,thelargestimportsourcebyfarwasAustralia,followedbyFiji,JapanandNewZealand.Today,FijiisthemainsourceofimportsaheadofJapan,China,AustraliaandKorea.GrowthofimportsfromFijihighlightstheimportance of regional trade relationships. The growth of imports from China also suggests a shift towards lower costgoods,bringingbenefitsforconsumersintermsoflowerprices,whencomplementedwithgoodcorrespondingpolicies related to consumer and product quality.

Figure 2.4.2: Avg. Weighted Traffic Rates in FICs, 2015

2.4.2. Goods Exports

AnalysisofexportsfromKiribatiisdifficultduetolimitationsintheconsistencyandaccuracyofthedata.Thekeyexportsrecordedoverrecentyearshavebeencoconutproducts,seacucumber,sharkfinand,inlateryears,fish(tuna)products.Receiptsfromcoconut-relatedproductshowever,havefluctuatedinrecentyears.

TheexportationoffishbeganstronglyaftertheestablishmentofKiribatiFishLimited(KFL)in2014.Themostaccurateexportstatisticshowever,comefromtheindustryitself.RecentstatisticsfromCustomsforthefirsteightmonthsof2015suggestthatfishexports(valuedatAUD$2.2mfromJanuarytoAugust)havebeguntoovertakecoconutproducts(AUD$1.2mforthesameperiod)forthefirsttimeinthatyearandhavesinceincreasedfurther (Fig 2.4.3)

Food 35%

Mineral fuels 25%

Mach. & transport equip 15%

Manufactured goods

Beverages & tobacco 7%

Chemicals 5%

Crude materials 1%Oils & fats 1%

Crude materials 1%

Exports Imports

200,000

100,000

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

2016

0

Fiji Samoa Solomon Is

Tonga Vanuatu Australia New Zealand

Kiribati

12

10

8

6

4

2

0

10.69.9

7.7

5.75.0

1.91.3 0.0

Source: National Statistics Office

Source: National Statistics Office

Source: National Statistics Office

10 11TPF 2017-2027 TPF 2017-2027

Figure 2.5: Revenue, Expenditure, Deficits and Surpluses, Kiribati, 2007-2016

Source: MFED

TheRERFalsoprovidesafinancingfunctionforrecurrentdeficits.Attheendof2016,thesovereignwealthfund,theRERF,stoodatAUD$868.1m.WhileRERFhasbeeninstrumentalinsupplementingrecurrentdeficits,strengtheningthe management of RERF is critical towards ensuring long term macroeconomic sustainability.

The TPF places the highest premium on a stable macroeconomic environment. A stable macro-economicenvironment is theonlyway inwhichtheconfidenceamong investorsandthepubliccanbemaintained. Italsoworksinfavourofthepoorwhotendtolosethemostduringperiodsofinflation.Inthiscontext,theGovernmentwill seek to manage expenditure prudently and provide the necessary resources to achieve sustainable economic growth. Fiscal measures to accelerate macroeconomic stability for long-term sustainable development will beimplemented,alongsidemeasuresto improvethegatheringofstatisticsformanagingandmonitoringeconomicdevelopment.

Policy Measures

Inordertomaintainmacroeconomicstability,theGovernmentwill:

• Continuously maintain and update the management of the RERF through regular monitoring of RERF asset performanceandefficientutilisationofRERFassets;

• IncreaseGovernmentrevenuebymaintainingandimprovingexistingplanstoexpandtherevenuebase;and• Improvedatabasecollectionandrecordingbystrengthening theNationalStatisticsOffice’s (NSO’s) inputand

collections.

Figure 2.4.3: Exports 1996-2016

2.5 Macroeconomic Policy

Government has undertaken a number of important macroeconomic policy reforms in recent years in response to the poor growth performance and fiscal sustainability issues that arose in the years directly following theGlobalFinancialCrisis.ThisperiodsawasignificantdeclineinthevalueoftheRERF,fallingrevenuesfromfishinglicencesandfromtax,underperformancefromStateOwnedEnterprises(SOEs),aswellasshortcomings indebtmanagement,leadingtoreductionsinGovernmentexpendituresandunsustainablegrowthinfiscaldeficit.

In2013,theGovernmentadoptedanEconomicReformProgramme(ERP)thatincludedtheintroductionofValueAddedTax(VAT),areductioninimporttariffs,commitmentstoreformthecountry’sunderperformingStateOwnedEnterprises (SOEs), changes in themanagement of the RERF portfolio and improved debtmanagement. Thesereformsalsocoincidedwithsignificant increases infishing licence revenueunder theVesselDayScheme (VDS),which together have resulted in a return to a positive fiscal balance for 2014 and 2015. This has allowed theGovernmenttoreplenishtheRERF.Largeinflowsofdevelopmentassistancefortheaforementionedinfrastructureprojectsalsoprovidedasignificantboosttogrowthperformanceinthisperiod,resultinginstrongGDPgrowthin2015.

Kiribati has maintained consistent improvement in revenue generation since 2010. Total revenue in 2016 was AUD$176.9mwhileexpenditurewasAUD$175.4min2016,resultinginasurplusofAUD$1.5m.Thisishigherthanthe total revenue generated of AUD$84.3m and the total expenditure of AUD$95.1m incurred in 2010 (Figure 2.5).Generally, Kiribati has experienced relative fiscal stability over the yearsdue to strongpublic expenditure,infrastructuredevelopmentandthegrowthinrevenuefromfishinglicencesandtheexpansionofitsrevenuebasethrough tax reforms associated with the implementation of VAT.

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Coconut Fish and Marine Other Re-exports

16000

14000

12000

10000

8000

6000

4000

2000

0

2007

-100

-50

0

50

100

150

200

250

300

61.4 67.4 69.6 84.3 62.291.3

126.8

187.8

253.3

170.6

2008 2009 2010 2011 2012 2013 2014 2015 2016

Revenue Expenditure Deficit/Surplus

A$ M

illio

ns

Source: National Statistics Office

12 13TPF 2017-2027 TPF 2017-2027

3. Trade and Sustainable DevelopmentTrade is essential for Kiribati’s long term sustainable development. The main channel through which trade supports progress towards achieving the Sustainable Development Goals (SDGs) is through its direct contribution toeconomicgrowth,and the incomesand livelihoodsof I-Kiribati.Other importantchannels include the impactof trade in improving outcomes in areas of health, education, communication and convenience throughwhichI-Kiribaticanlivetheirlives.

Figure 3.1. Overall Framework for How Trade, defined broadly as ‘Exchanges’ or ‘Transactions’ between individuals, contributes to Development

EfficienttradethroughimprovedprocessesattheborderareexpectedtolowerthepriceofgoodsandservicesthatareusedeverydaybyI-Kiribati,fromfoodtohardwaretomobilephones.Increasedlevelsoftrade–domesticallyandinternationally–contributetoincreasedGovernmentrevenues,allowingtheGovernmenttoprovideservicesand infrastructure and reducing dependence on overseas aid.

Enablers of Trade: Skills, Transport and Connections, IT, Business Environment, Private Sector Development, Market Access, Trade Facilitation, Intellectual Property

Increased Exports:

Goods and Services

Com

plem

enta

ry P

olic

ies

Increased Production

Increased Government Revenue

Employment

Higher Incomes

Economic Growth and Development

Lower Costs

Increased Investment

Increased Domestic

Trade

Cheaper Imports

Increased Economic Exchanges (Trade)

Improved Sector Policies: Fisheries, Agriculture, Labour Mobility, Tourism, Other

14 15TPF 2017-2027 TPF 2017-2027

3.1 Trade and Health: Ensuring a Healthier Kiribati

Engagement in domestic and international trade should contribute to the healthy and sustainable development of citizensofKiribati.TheGovernment’soverallstanceisthatexchangesofgoodsandservicescontributesignificantlytowell-beingandsustainabledevelopment,andtradedoesnotbyitselfleadtounhealthyoutcomes.Nevertheless,there are concerns that an increase in consumer choices brought by greater availability of more convenient foodstuffsofpoornutritionalvalueaswellastobaccoandalcoholarecontributingtopoorerhealthoutcomesinthePacificIslands,contributingtohighlevelsofnon-communicablediseases(NCDs)andprematuredeath.

In Kiribati, the prevalence of NCDs is increasing, and consequently consuming an increasing proportion of thepublicexpendituretowardstheHealthbudget.ThemostcommonNCDisdiabetes,withaprevalencerateof15.7per cent as shown in the most recent WHO Steps Survey in 2015. This survey also showed that 83.6 per cent of the population have three or more risk factors in developing NCDs1,anincreasefrom79.0percentin2006.TheWorldBankestimatesthatby2040,theeconomicburdenofNCDsinKiribatiwillamountto9.2percentof2010GDPandabout11percentoftheeffectivelabourforcewillbelostduetoNCD-relatedprematuremortalityanddisability.

Nationally,Government can encourage reduced consumptionof unhealthy foodproducts andpromotehealthyalternativesthroughthetaxationsystem,bordercontrols(customsandbiosecurity),theFoodSafetyRegulationsFramework, the National Quality Policy Framework, other policies and investments to increase the supply andavailability of fresh local agricultural and fisheries products, and the adoption of regional and internationalconventions relating to trade and public health. Government has also developed a draft Food and Nutrition Security Policy, and a draft National NCDMulti-Sectoral Strategic Plan for a coherent cross-Governmental approach toNCDs.TheMinistryofHealthandMedicalServices(MHMS)hasalsoprioritiseditseffortsonNCDissuesthroughinterventions aimed at prevention and management.

The Government’s overall policy is to ensure that international and domestic commerce is regulated in ways whichareconsistentwithpublichealthobjectives,withmeasuresdesignedthatconformtorelevantinternationalobligations and through best practices.

Policy Measures

InordertopromotethehealthyandsustainabledevelopmentofKiribati’scitizens,the

Government will:• Ensure the trade policy is consistent with public health objectives and the country’s obligations in regional trade

agreementsrelatingtoSanitaryandPhytosanitary(SPS)MeasuresandTechnicalBarrierstoTrade(TBT);• AdoptandeffectivelyimplementtheNationalNCDMulti-SectoralStrategicPlan;and• AdoptandeffectivelyimplementthedraftFoodandNutritionSecurityPolicy.• Adopt regulatory measures to ensure public health objectives while ensuring such measures are in line with the

country’s obligations in regional trade agreements.

1 RiskfactorsofdevelopingNCDsincludebeingcategorisedasoverweightorobese,beingphysicallyinactive,eatinglessfruitsandvegetables,consumingtobaccoandalcoholaswellashavinghighbloodpressure,bloodglucoseandbloodcholesterollevels.

3.2 Inclusive Trade: Spreading the Benefits of Trade to All I-Kiribati

Tradeneedstogenerateeconomicgrowththatissustainableandbroad-based.Inparticular,thebenefitsoftradeneed to reachmarginalised groups, including women, youth, disabled people and those on the outer islands.Analysisofthe2015Censusshowsthattheparticipationrateofwomeninthelabourforceisaround58percent,which is higher than other PICs but still below the average in developed countries (Figure 3.2.1). Figure 3.2.2 shows thatunemploymentamongwomen(43.5percent)wassignificantlyhigherthanthatofmen(33percent).

Figure 3.2.1: Female (15+) Labour ForceParticipation Rate in Selected PICS

Source: Population Census 2015 Source: Population Census 2015

A comparison of the quality of employment – in terms of types of jobs – thatwomenparticipate in, present acomplexpictureas indicated inFigure3.2.3.Althoughwomenaremore likelytobeengagedin lower-value jobssuchashandicraftproduction,therearefewerwomenengagedinotherlower-valueareassuchascopracutting.At the same time, sectors such as distribution (retail and wholesale) and finance are more gender-balanced.Governmentisanimportantemployerofwomen,andwomenaremuchmorelikelythanmentobeemployedintheeducationandhealthsectors.Inadditiontoformalsectorsofemployment,womenarealsomorelikelytobeinvolved in informal and unrecorded work.

Figure 3.2.3: Total Employment by Sector and Gender, selected sectors (with gender ratio by sector in percent)

Source: Population Census 2015

Figure 3.2.2: Unemployment: work-seekers as percentage of labour force

Vanu

atu

0

50

Kiri

bati

Tong

a

Solo

mon

Is.

Fiji

Sam

oa

0%

50%

100%

Men Women

0

1000

2000

3000

4000

5000MenWomen

27%38% 49%

18%69%

26% 70% 92% 7% 60% 62% 8% 49%

Agr

icul

ture

Publ

ic A

dmin

Who

lesa

le &

Reta

il

Fish

erie

s

Educ

atio

n

Tran

spor

t

Hea

lth

Han

dicr

afts

Cons

truc

tion

Hot

els

and

Rest

’ts

Pers

onal

Ser

vice

s

Secu

rity

Ser

vice

s

Fina

nce

& R

eal

16 17TPF 2017-2027 TPF 2017-2027

Levelsofyouthunemploymentdonotseemtobesignificantlydifferentfromthatofolderworkers,butagainthequalityofjobsmaybelowerforthoseaged15-24.Withrespecttowomenandyouthemployment,thechallengeforGovernmentistoensurethatthesegroupsareprovidedwiththeskillsneededtogainmeaningfulemployment,and to provide continued opportunities for them to use those skills which extend to labour mobility schemes.

Intermsofouterislanddevelopment,formaleconomicactivityispresentlyconcentratedheavilyonSouthTarawa(3.2.4). Census data shows that although levels of unemployment may be higher in Tarawa (which may be due to high levels of settlement there with more people seeking employment) the structure of employment is very differentforthosewith jobs. InTarawa,morethanthreequartersofworkersclassifythemselvesas ‘employees’whileoutsideSouthTarawaonlyone-thirdfallintothiscategory,withhalfclassifyingthemselvesas‘self-employed’and15percentas ‘subsistence’.This reflects thedifference ineconomicopportunitiesavailablebetweenSouthTarawaandelsewhere,andthefactthatactivitiesaremorelikelytobeinformalontheouterislands.

There is a need to improve the economic situation of women given their direct contribution to the economy and the additional benefits that come fromempoweringwomenwithin communities andhouseholds. There is alsoaneedtoprovideopportunitiestoKiribati’syouthinordertodeveloptheirlong-termskillsandfuturepathwaystosuccessfulemployment.Thekeychallengeistodevelopeconomicactivitiesontheouterislands,includingtheLineandPhoenixgroup.Inresponsetotheseissues,theGovernmentisintheprocessofadoptingkeypoliciesongenderandyouththroughtheMinistryofYouth,Women,SportsandSocialAffairs (MWYSSA).GovernmentalsoadoptedtheLineandPhoenixIslandsDevelopmentStrategy(LPIDS)in2015.Theaforementionedstrategieswillbecomplementedbyspecificprogrammestargetingthesepopulations,andalsoalignedtoprioritysectorswhichtheGovernment has envisaged in its 20 year vision development plan.

Policy Measures

Inordertoenhancethedevelopmentofinclusivetrade,theGovernmentwill:• Ensure the adopted Gender Policy provides economic and trade opportunities for women and people with

disabilities;• Implement women’s economic empowerment programmes in sectors where Kiribati has a comparative

advantageinlinewiththeGovernment’s20yearvision;• EnsuretheNationalYouthStrategyprovideseconomicandtradeopportunitiesforyouth;• Implement youth economic empowerment programmes in sectors where Kiribati has a comparative advantage

inlinewiththeGovernment’s20yearvision;• ImplementtheLineandPhoenixIslandIntegratedDevelopmentStrategy2016-36objectives,focusingontrade

andprivatesectordevelopment;and• Formulate and implement outer island and private sector development strategies related to the Gilbert Islands

Group.

3.3 Trade and Environmental Sustainability

Tradeneedstogenerategrowththatcontributestosustainabledevelopment,andeffortstoincreasetradeneedtogohand-in-handwith strongenvironmentalpolicies. The linkagesbetween tradeand theenvironmentoccurinanumberofdimensions, fromKiribati’s internationalrelations, toon-the-groundeffortstomanageresourcessustainably for future generations. The Phoenix Islands Protected Area (PIPA) in Kiribati is an important example of how trade depends on strong environmental policies that ensure conservation and protection of biodiversity.

Internationally,Kiribatiisattheforefrontofglobaleffortstoreduceclimatechangeanditsimpactsontheplanetand is party to a number of regional and global conventions or multilateral environment agreements (MEAs). With respecttoinfrastructure,investmentsinrenewableenergywillreducetheneedforthecostlyimportationoffossilfuels,and‘earlyadoption’ofnewtechnologyisoneofthemosteffectiveareasforeffortsonimportsubstitution.Managing urban development is a big challenge for Kiribati and requires investment in sanitation and waste management facilities.

Atthesectorlevel,Kiribati’seconomydependsheavilyonenvironmentalconservation.Forinstance,thecountry’sfisheriesresourcedependsentirelyonthepreservationofspeciesstockbothatthenationalandregionallevels.Theagriculturesector requirescareful conservationofscarce landandwater resources,while tourismdependsheavily on the preservation of Kiribati’s unique natural assets and overall environmental waste management. The Government has put in place the Kiribati Integrated Environment Policy (KIEP) that was launched in August 2013 and focuses onbuilding capacity to respond and adapt to climate change, islandbiodiversity conservation andmanagement,wastemanagementandpollutioncontrol, resourcemanagementandenvironmental governance.The range of legislative instruments, strategies and policies available to Kiribati to pursue these goals areoutlined within the policy. These include a Kiribati Joint Implementation Plan on Climate Change and Disaster Risk Management (KJIP) that was released in August 2014 and is currently under review. The overall Government policy is to ensure consistency between the trade policy and Kiribati’s policy objectives on environmental sustainability.

Policy Measures

In order to ensure consistency between the trade policy and Kiribati’s policy objectives on environmental sustainability,theGovernmentwill:• Continue to implement new Trade Policy-related measures including an environment licensing system to

supportwastemanagementandpollutioncontrol;• Adoptandeffectivelyimplementthedraftwastemanagementstrategyandoilspillresponseplan;• Promoteandsupporttheuseofsustainablerenewableenergysourcesandenergyefficiency;• Establish a legislative and institutional framework to improve urban planning and design leading to more vibrant

localeconomicdevelopment;• Catalyseprivatesectormovementtowardsagreeneconomy,includingsmallscalebusinesses;• Buildthecapacitytofacilitatethenotificationandreportingrequirementsunderexistingwasteandchemical-

relatedconventionsandMEAs;• Ensurecompliancewith internationalconventionsontradeincertaingoods,e.g.ConventiononInternational

TradeinEndangeredSpeciesofWildFaunaandFlora(CITES);• Support provisions in trade agreements that encourage consistency between trade and sound environmental

practices;• Undertake Environmental Impact Assessments for trade-related, investment or development projects in line

withinternationalbestpractices;and• Build greater technical capacity and awareness around the linkages between trade and the environment.

Figure 3.2.4: Employment Type: South Tarawa and other Areas

South Tarawa Outside South Tarawa-20.0%

30.0%

80.0%

Employee or EmployerSelf EmployedSubsistence

Source: National Statistics Office

18 19TPF 2017-2027 TPF 2017-2027

4. Trade Policy Instruments4.1 Restrictions on Imports

Importrestrictionsandprohibitionsareimplementedonlyongroundsofhealth,safetyorsecurity.TheCustomsAct restricts the import of:

• Absoluteorethylalcohol;• Earth,soil,loam,sand,mud,dust,clay,ashes,andsimilarsubstancesfromanysourceotherthansoilunlessthey

areimportedfromHawaii,Fiji,SolomonIslandsorAustralia

The following items are prohibited from import:• Counterfeit coins• Foodunfitforhumanconsumption• Indecent or obscene goods• Prohibited animals• Matches containing white or yellow phosphorous• GoodsmanufacturedoutsideofKiribatibearingthenameortrademarkofanyoneinKiribati,unlessthegoods

indicate the country of origin• Prepared opium or opium pipes• Goods bearing the emblem of Kiribati• Fictitious postage stamps• Dangerous knives• Imitationfirearms• Gambling machines• Any goods illegal under Kiribati law

4.2 Import Duties and Duty Exemptions

Following a decision taken by Government to reform the tax system in 2014 to replace import duties with VAT and excisetaxes,alltariffrateshavebeenreducedtozero.Thecurrentpolicyistomaintaintherecentlyadoptedzerotariffpolicy,whichplacesKiribatiamongthemostopeneconomiesintheworld.

Intheeventthattariffsarereinstatedatsomepointinthefuture,dutyexemptionswillbeappliedinanefficient,non-discriminatoryandpreferablynon-discretionaryway.

4.3 Fees and Permits for Import and Export

LicencesandfeesapplytoimportersofgoodsintoKiribati.TheMinistryofCommerce,IndustryandCooperatives(MCIC)currentlydoesnotchargeanyfeesforimportorexportlicenses,nordoesitchargeanyfeesforinspection.

TheMinistryofEnvironment,LandandAgriculturalDevelopment(MELAD)requirestraderswhoimportgoodsintoKiribatitoapplyforalicensebyusinganimportpermitapplicationform.Fromthecompletedapplications,thoseproductswhichareallowedtoenterwillbegrantedan importpermit,andthe importerwillbeupdatedonanyrejectedconsignments.MELADchargesAUD$5inspectionfeepercontainerforemptycontainersonly.Nofeesareimposed on the inspection of goods. The Ministry of Health and Medical Services (MHMS) does not charge fees for its services.

Island and Town Councils impose licence fees on importers of goods under the Local Government Act 1984(amended 2006). The importers pay these fees for each town that they operate in.

20 21TPF 2017-2027 TPF 2017-2027

Forexports,KiribatiCustomsEnforcementAgency(KCEA)issuescertificatesoforiginfortheexportofcoconutoilandfishproducts.TheMinistryofFisheriesandMarineResourcesDevelopment(MFMRD)issuesalicensefortheexportationoflivefishaswellasCITEScertificatesasawaytohelpprotectendangeredspecies.Feesarecurrentlybased on species.

Policy Measures

• Government will apply international best practice on the publication of all procedures and fees connected with importandexport;and

• Develop an import –Export handbook to guide exporters and importers.

4.4 Restrictions and Taxes on Exports

Kiribatidoesnotapplyexportrestrictions,exceptfor itemswhichare illegalunderKiribati law,andtherearenoexport taxes.Exportedgoodsrequire theusualdocumentationandclearancessuchascertificatesoforiginandSanitaryandPhyto-sanitaryMeasures(SPS)certificates.

4.5 Other Trade Policy Instruments: Anti-dumping, Countervailing Measures and Safeguards

Kiribatidoesnotapplyanti-dumpingorcountervailingmeasures.Kiribatidoesnotapplysafeguards,although itretainstherighttoincreasetariffswhereasurgeinimportsthreatensadomesticindustry.Intheeventthattheseare required, they will be imposed in line with international best practice and the country’s obligations underregional trade agreements.

4.6 Key Trade-Related Legislation

Giventhecross-cuttingnatureoftrade,alargebodyoflegislationhasthepotentialtoaffectit,bothnegativelyandpositively.Table4.1providesanoutlineofmostofthesignificanttrade-relatedlegislationwhichcurrentlyexistsinKiribati.

Table 4.1 Key Trade-related Legislation

Legislation Brief Explanation

Foreign Investment Act 1985

Establishes the Foreign Investment Commission whose function is to assess foreign investment applications, approving investment valueofuptoAUD$250,000andsubmittingtheresttoCabinet.Membersof the commission are mostly permanent secretaries drawn from key technicalministriesinchargeofinvestment-relatedmatters

Protected Industries Ordinance 1997

This legislation is meant to protect industries in Kiribati which the government feels are critical for the country and therefore requires protection. The Cabinet and the President are empowered to declare anybusiness,includingforeigninvestmentbyanyforeignenterpriseor company, tobeaprotected industry. – TtheCommission isnotallowed to do this.

NativeLandsOrdinance1977Thisprovidesforthealegalbasisonforlandownership,leassees,sub-leases,neighboursandlandpurchasers.

Employment and Industrial Relations CodeAct2015,OccupationalHealthand Safety Act 2015

These provides the legal basis for employment in Kiribati – employers’ obligations and employees’ working conditions – with which all businesses operating in Kiribati must adhere to the under the Decent Employment requirements.

Consumer Protection Act 2001 and Regulation 2004

Provides for consumer rights in purchasing goods and services. EmpowerstheMinistertoprescribebyregulation,productsafetyorquality standards for any specifiedkindof goodsandprohibits thesupply or trade in goods in relation to which there is an approved standard.

Insurance Act 1981 Provides for the setting up of an Insurance company in Kiribati.

ImportLevy(SpecialFund)Ordinance1977

Provides aA scheme for collecting levies or charges on all imports in order to pay for the freight to the outer islands, to ensuringe thatimported goods sold on in the outer islands have the same price as the imported goods sold on South Tarawa.

Fisheries Act 2010withamendments2014,FishExportRegulation 2012

ProvidesforthemanagementanddevelopmentoffisheriesinKiribati,including the control of foreign fishing vessels. The Minister ofFMRDisresponsibleformakingappointmentsunderthisAct,whichrequires the formulation of management plans for each species of fisheriesresource.Amendedin2014, interaliatocreatetheKiribatiSeafoodVerificationAgency(alsocalledtheCompetentAuthority)tothelegislationverifiesytheimportandexportofseafoodandrequiresthecertificationofexportswithcertainrequirements.

Kiribati Ports Authority Act 1999 Establishes and regulates the KPA.

Shipping Act 1990 Inter aliaprovidesfortheappointmentofalicensingofficerforvessels.

Customs Act 2005Provides for the management and control of goods entering the country. It The Act includes the a provision for setting customs duties.

Quarantine and Importation ofAnimals Ordinances 1977 and Biosecurity Act 2011

Provide detailed requirements for the import and export of plants animals and their products, as well as domestic surveillance andcontrol measures as well as the sanctions and mechanisms for enforcement.

Co-operative Societies Ordinance1977

Specifies the membership criteria, the management of the funds,and the auditing of the societies. The Registrar of Cooperatives is in charge of the societies and is appointed by the Minister of Commerce ,IndustryandCooperatives.

Weights and Measures Act 1984Provides for the appointment of inspectors, outlines their powers,defines what weights and measures are to be used and outlinespenalties in the any case of violation of these rules.

Food Safety Act (2006) and Food Regulation and Standards (2014)

Puts in place the basic requirements and prohibitions as well as the powersandfunctionsfortheofficialcontroloffood.

Copyright Ordinance 1980 Provides for the protection of property and patent rights. Fines for infringing copyrights are also detailed.

PetroleumAct(1977),PublicUtilitiesOrdinance (1977) and amendments 2010

Regulates the importation, storage and sale of petroleum and itsproducts.

Price Control Ordinance Establishes mechanisms to impose price controls on goods

22 23TPF 2017-2027 TPF 2017-2027

5. Securing Kiribati’s Place in the Global EconomyKiribati is a small island economy trading in an increasingly integrated global marketplace of more than 7.3 billion people.While this provides great opportunities for Kiribati to export goods, services and labour, Kiribati facessignificantchallengesinparticipatinginglobaltrade.Kiribaticontainssomeofthemostisolatedlocationsontheplanetandisphysicallyverydistantfrommajorconsumermarkets inAsia,theAmericasandEurope.Asasmalleconomy,Kiribatialsohaslimitedpowertoinfluenceglobalmarketsandsupplychains.

Improving Kiribati’s position in the global economy will mean adopting a proactive approach to building strategic partnerships in trade and commerce. This means engaging in pro-development trade agreements and othercommercial arrangements that secure maximum benefits for I-Kiribati in terms of market access for its mainexports–ingoods,servicesandlabour–andmuch-neededinvestmenttotheeconomy.Atthesametime,Kiribatiwillneedtominimisepotentialcosts,incorporatingsafeguardsagainstlossesinGovernmentrevenue(whereriskshavereducedconsiderablyfollowingrecenttaxreforms)orinmaintaining‘policyspace’topursuekeydevelopmentobjectives.

Figure 5.1 Kiribati’s Broad Objectives from Trade-related Partnerships and Agreements

FTAs: EU, GSP(Global), LDC

Arrangements: Seafarers, Fishery Agreement.etc.

FTAs: SPARTECA PACER+, PICTA,

MTEC

Regional Markets

Kiribati

Access for Fisheries Exports,

Seafarers

International Markets(EU,

Japan, US, etc)

Investment, Aid for Trade

Labour Mobility

Arrangements: Labour, Air & Sea Transport, Fishing

Investment, Aid for Trade

24 25TPF 2017-2027 TPF 2017-2027

5.1 Overall Objectives for Kiribati’s Trade Engagement with the World

5.1.1 Expanding Market Access for Kiribati-made Goods

Securing long-termmarketaccess forexports is a general goalof any tradepolicyand isusually the subjectofcomplicated negotiations within multilateral or regional Free Trade Agreements (FTA). It is important to note thatmarket access depends not just on tariffs but extends to Sanitary and Phytosanitary (SPS), i.e. quarantinerequirementsandotherbarrierswhicharenowequally,ifnotmore,importantinthecaseofmanygoods.

Asadevelopingcountry,Kiribati’sexportsalsoenjoypreferentialduty-freeaccesswithinregionalandinternationalmarkets. Some of these benefits depend on the fact that Kiribati is classified by theUN as a Least DevelopedCountry(LDC).TheimpactofKiribati’spotentialgraduationfromLDCstatusasearlyas2021,andthesubsequentlossofthesepreferences,needstobecarefullyassessedagainstthelevelofactualorpotentialfutureexports,andalternative arrangements available to Kiribati.

ThemostimportantissueforKiribatiwithrespecttotradeingoodsismarketaccessforfisheriesproducts(mostnotablyfreshtunaloins)thatareprocessedonshoreinKiribatiandsentoverseasasKiribatiproducts.Forthese,there are a complicated set of factors that govern access for Kiribati tuna products in international markets and affect whether they aremore or less competitive than other potential suppliers. These factors include overallglobalsupplyanddemanddynamics(whichdetermineglobalprice),theleveloftariffadvantage(or ‘preference’)thatKiribatihasoverotherexporters,the ‘rulesoforigin’thatapplytofishexports,andKiribati’sabilitytomeetrequirementsineachmarketintermsofSPS,IUUfishingandotherindustry-imposedstandards.

Intermsofthe‘costs’ofexpandingmarketaccess,themaincostforseekinggreatermarketaccessistherequirementunderfreetradeagreementsforKiribati to liberalise importsby loweringtariffrates.However, this isno longerakeyfactorforKiribatigiventhattariffshavealreadybeenreducedtozerowiththeintroductionofVATin2014.

5.1.2 Expanding Market Access for I-Kiribati Workers

AkeyobjectiveforKiribati’sengagementwiththerestoftheworldistoensureincreasedaccessforI-Kiribatiworkersoverseas. This objective is supported by the KV20 which seeks to increase the number of overseas workers. The currentKiribatiDevelopmentPlan(KDP)2016-2019,directlyaddresses issuesaroundmarketaccessfor I-Kiribatiworkersinoverseasmarkets,withatargetoffivenewmarketsbytheendoftheKDPperiod.

5.1.3. Looking Beyond FTAs to Other Commercial Arrangements

Some of Kiribati’s most important strategic partnerships at the international level have come not through traditional freetradeagreements,butinsteadthroughstrategiccommercialarrangementsinarangeofareas.Theseincludelong-termcommercial relationships for seafarerswithGermancompaniesandmore recent success in securinggreater economicbenefits frommanaging regional fishing licences.Otherexamplesof arrangements thathavea strong overlap with national trade objectives include the Recognised Seasonal Employer (RSE) labour mobility schemewithNewZealand,andregionalshippingthroughtheMicronesianShippingCommission.

5.2 Preferential Free Trade Arrangements and Negotiations Currently Involving Kiribati

Asadevelopingcountry,Kiribatibenefits fromseveralpreferentialarrangements thatgive itsexportsDutyFreeandQuotaFree(DFQF)accesstomajordevelopedcountrymarketsincludingtheEU,Australia,NewZealand,theUnitedStatesand Japan.TogetherwithotherPacific IslandCountries (PICs),Kiribati isalsocurrently involved inthe negotiation of a number of trade agreements that have the potential to strengthen and deepen its economic relationship with key partners and assist with integration into the global economy. These include the Economic PartnershipAgreement(EPA)betweenPICsandtheEuropeanUnion(EU),thePacificAgreementonCloserEconomicRelations (PACER) Plus between PICs and Australia and New Zealand.

Table 5.1: Summary of Kiribati’s Market Access Arrangements with the World

Market Arrangement Coverage Implications for Kiribati

DevelopedCountries(EU,US,Japan)

Current GeneralisedSystem of Preferences (GSP)

Non-reciprocalwithbenefitsfocused on tradein goods

Coverage under some schemesmay change if Kiribati graduates fromLDCstatus.

Global Kiribati isnot a WTOmember

World TradeOrganization(WTO)

All aspects oftrade: sets basictradelaw,forumfor resolving disputes

Benefitofparticipatinginglobaltraderule-making,althoughaccession is a long processcurrently beyond Kiribaticapacity

EuropeanUnion

Undernegotiation

EconomicPartnershipAgreement (EPA)

Various potentialscenariosincluding interimor comprehensiveEPA

Potentialsignificantbenefitsforimprovedaccessforfishexports to the EU. Costs interms of potential loss of policyspace.

Australiaand NewZealand

Current SPARTECA Goods,non-reciprocal

Fewimplicationsasbenefitsarelimited. Kiribati will continue tobenefitfromSPARTECAuntilPACER-Plusentersintoforce

Signed byKiribati

PACER-Plus Goods,services,investmenttrade-related issues

Potentialbenefitsinmarketaccess,labourmobility,services,investmentandAidforTrade

PacificIslandCountries

Current PICTA Trade inGoods

Goods Fewcostsandbenefitsatthispoint

Undernegotiation

PICTA Trade inServices andRegionalLabourMobility

Trade in Servicesand RegionalLabourMobility

PotentiallyimportantbenefitsonincreasingaccesstoPacificlabour markets. Potential costof allowing selective access forPIC workers into Kiribati.

26 27TPF 2017-2027 TPF 2017-2027

5.2.1 Generalised System of Preferences (GSP)

Asadevelopingcountry,Kiribatiiseligibletobenefitfromthespecialschemesofleadingtradingnations,includingtheEuropeanUnion,UnitedStatesandJapan.Preferencesaregrantedtodevelopingcountriesona‘generalised,non-discriminatory and non-reciprocal’ basis and as such the system is known inWTO law as the GeneralisedSystem of Preferences (GSP). Kiribati has access to such GSP schemes even though it is not a member of the WTO (seebelow).Insomecases,KiribatireceivesadditionalpreferencesbyvirtueofitsstatusasanLDC.Forexample,theduty-freeaccessofferedbytheEUmaybeimportantforfisheriesproducts.MostKiribatiexportstakeplaceundervariousGSPschemes.Forexample,recentlyKiribatihasbeenabletoexportfishtotheUnitedStates,EUandJapanunder their respective GSP systems.

5.2.2 World Trade Organization (WTO) and Basic International Trade Rules

Most trade rules incorporated into agreements to which Kiribati is a party or which it is currently negotiating are basedonWTOPrinciples.Establishedin1995,theWTOistheprimaryglobalorganisationresponsiblefordealingwithinternationaltraderules,includingprovidingaforumfornegotiatingnewrulesandsettlingtradedisputes.

Todate,thereare164WTOMembers,includingAustralia,NewZealandandsixofthelargestPICs.WhileKiribatiisnotamemberoftheWTO,itneedstocomplywithmanyofthebasicinternationaltraderulesestablishedattheWTO.ThemainadvantagestobeingamemberoftheWTOincludehavingavoiceonissuesthatcouldaffectKiribatitrade(suchasnewWTOrulesonfisheriessubsidies),andhavingaccesstotheDisputeSettlementMechanism.Atthesametime,tobecomeaWTOmember,itisnecessaryforanapplicanttogothroughanoftenlengthy,resource-intensiveprocess.Insomecases,thatprocesscouldtakemorethanadecade.

5.2.3 Trade with the European Union

Kiribati’saccesstotheEUmarketwastraditionallymaintainedalongsidetheAfrican,CaribbeanandPacific(ACP)countries under various non-reciprocal preferential arrangements. However, the expiry of those provisionshas meant that the EU and ACP States have been required to negotiate a new set of reciprocal regional trade agreements, known as Economic Partnership Agreements (EPA), which aim tomaintain duty-free access whileofferingadditionalbenefitsthatenhancetradeintegration.

a) Economic Partnership Agreements

KiribatihasbeenparticipatingactivelyinnegotiationstowardsaPacific-EUEPAsince2005.TwoPacificACPstates(PACP)havesigned‘interimEPAs’(PNGandFiji)primarilyinordertomaintainmarketaccessfortheirkeyexports.However, negotiations towards a final outcomehave been challenging due to a number of contentious issues,including EU demands for PACPs to change their fisheries conservation and management measures, ‘globalsourcing’ rulesoforigin forfisheriesproducts, export taxes, themost-favourednation clauseanddevelopmentcooperation assistance.

GiventhatnegotiatingEPAsappearatthispointunlikelytoendina‘comprehensiveEPA’coveringallaspectsoftrade,the current policy issue is whether Kiribati should sign an interim EPA covering goods only. It is important to note thatKiribatiwillcontinuetobenefitfromtheEU’sseparateGSP-related‘EverythingButArms’(EBA)arrangementforLDCsevenifitdoesnotsignaninterimEPA.ThisprovidesKiribatiexportswithDutyFreeandQuotaFreeaccesstotheentireEUmarketonanon-reciprocalbasis.AccesstothearrangementwillcontinueaslongasKiribatiremainsanLDC.ShouldKiribati graduate tomiddle-incomestatus, theremaybeapossibility tonegotiatea transitionalextension of EBA preferences, but only for a limited period before Kiribati’s exports are subjected to potentialtariffsundertheEU’sstandardGSPscheme.Inthiscase,accedingtotheinterimEPAmaybethebestwaytosecurecontinuedpreferentialmarketaccessforchilledtunatotheEU,ifthisremainsanimportantpolicygoalatthatpoint.

5.2.4 Trade with Australia and New Zealand

a) South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA)

SPARTECAhasprovidedDutyFreeandQuotaFreeaccessforexportsoriginatinginPICsintotheAustraliaandNewZealandmarketsonanon-reciprocalbasissince1981.However, it isgenerallyacknowledgedthatfewPICshavebeenabletobenefitfromtheAgreementduetoalackofPICexportsectorsandthestringent‘rulesoforigin’.Thepreferential access that PICs enjoyed under SPARTECA has also been eroded by the impact of trade liberalisation by Australia and New Zealand. Kiribati is a party to SPARTECA and the Agreement will remain in force until such a time as another agreement (such as PACER Plus) comes into force.

b) Pacific Agreement on Closer Economic Relations (PACER) Plus

PACERPlus isacomprehensive tradecooperationagreementbetweenAustraliaandNewZealandand theFICs,whichincludetraditionalliberalisationcommitmentscoveringtradeinbothgoodsandservices,alongsidenewerelement such as investment and capacity building.

NegotiationsthattookplaceoverseveralyearsconcludedinApril2017,andKiribatisignedtheagreementinJune2017alongsideAustraliaandNewZealandandtenotherPICs.GiventhesignificanceofAustraliaandNewZealandastradingpartners,theGovernmentofKiribatiplacesgreatimportanceonPACERPlus,andwillimplementpolicymeasurestofasttracktheratificationoftheagreementandfacilitatethemaximisationofdevelopmentbenefitsrelated to PACER Plus.

5.2.5 Trade within the Pacific Islands

a) Pacific Island Countries Trade Agreement (PICTA) Trade in Goods

PICTAcameintoforcein2003andprovidesforthegradualliberalisationoftradeingoodsamongPICs,withPICdevelopingcountriessuchasFijirequiredtophaseouttheirtariffsby2015andPICSmallIslandStates(SIS)andLDCssuchasKiribatiby2017.PICTAwasinitiallyintendedtoserveasasteppingstoneforPICstoparticipateintheglobaleconomyandtheestablishmentofasingleregionalmarket.MostPICsarepartytoPICTA.KiribatiratifiedtheAgreementin2003,andhasannounceditsreadinesstotradeunderPICTAin2017.Governmentwillimplementthe necessary measures to strengthen the capacity of the private sector to take full advantage of market access opportunitiesofferedbyPICTA.

b) PICTA Trade in Services

AProtocoltoPICTAonTradeinServiceswasagreedin2012.TheobjectivesoftheProtocolinclude,inparticular,promotinggrowthanddevelopmentinthePICsandthereductionofpovertyby,interalia:(a)providingaframeworkfor the progressive liberalisation of trade in services among the Parties and strengthening the capacity of the Parties toregulatetrade;andfurtheringeconomicintegrationinthePacificregionwithaviewtotheeventualcreationofasingleregionalmarket.

Kiribatiwasoneof tenPICs tosign theProtocol in2012buthasnotyet ratified it.Todate, fourcountrieshaveratified theProtocol – Samoa,Nauru,Republic ofMarshall IslandsandTuvalu. Six ratifications are required forthe Protocol to come into force. An essential part of the Protocol comprises the schedules of trade in services liberalisation commitments of each Party which set out the service sectors each PIC Party is willing to open to other PICParties,andunderwhatconditions.

28 29TPF 2017-2027 TPF 2017-2027

Government recognises the opportunity afforded by the Protocol to strengthen the economy and develop itstradingcapacitythroughexpandinganddeepeningthelocalservicessectoraswellas,overtime,takingadvantageof opportunities in other Protocol Parties for Kiribati’s own service providers. Government will implement policy measurestofacilitatetheratificationofPICTAtradeinServices.AssistancewillbesoughtwherenecessaryforthepreparationofrequiredregulationstogiveeffecttoKiribati’sProtocolcommitments.

c) PICTA – Temporary Movement of Natural Persons (TMNP)

Regional negotiations amongPICs, includingKiribati, are continuing on a TMNP scheme, the objective ofwhichwould be to draw from labour surpluses in individual PICs to meet national skill shortages and stimulate skills developmentthroughouttheregion.Aspartofthenegotiationprocess,labourmarketstudiesaretobepreparedto assist individual PICs determine their negotiating positions.

A TMNP scheme has the potential of generating significant benefits in terms of opening new labour marketopportunitiesforI-Kiribatiwithintheregion,althoughitneedstobeassessedagainstotherdevelopmentsincludingPACERPlusandbilateralarrangementswithspecificFICs.TheGovernmentwillanalysepotentialgainsforKiribatiinenhancinglabourmobility,giventhePACERPlusagreementandtheongoingbilateralarrangementswithFijiandthe Cook Islands among others.

d) Micronesian Trade and Economic Community (MTEC)

TheMicronesianTradeandEconomicCommunity (MTEC) isasub-regional initiative focusedontrade,economiccooperation and integration among the Micronesian countries. While Kiribati is geographically and culturally consideredaMicronesiancountry,itisnotcurrentlyamemberofMTEC.

Inrecentyears,theMTEChasevolvedfromanMOU-basedcooperationandcoordinationarrangementsignedin2008,toamoreformalTreatyarrangementsignedinSeptember2014.ThekeyprovisionoftheMTECTreatywastoestablishatimeframe(offourphasesofuptofiveyearseach),leadingfirstlytothecreationofaneconomicunionbetween the Member States:

•Phase1:Settingtherules,institutions,andinfrastructureforpreferentialtradeandinvestment;•Phase2:Movingtowardsfreetradeandinvestment;•Phase3:Harmonisingtradeandinvestmentpoliciestowardsacustomsunion;• Phase 4: Realising a common market leading to an economic union

The treaty also established a permanent Secretariat with its headquarters in Pohnpei in FSM. While the MTEC timeframe is ambitious, integration is made easier by the fact that the three current members are all FreelyAssociatedStateswiththeUS,andshareacommoncurrency (theUSdollar).Whilethearrangementcouldhelpimprove connectivitybetweenmembers, theeconomicbenefitsof integrationmaybe limited, given the similareconomic structures, the common challenges of isolation, and the limited scope to increase economic scalesignificantlyamongthegroup.Intherecentpast,KiribatiindicatedtheirinteresttobecomeamemberofMTEC.

Government will support and watch developments in MTEC closely for any opportunities it may present to increase tradeandcooperation,whileatthesametimeconsideringthecontextof itsgrowingconnectivityandeconomictieswith largerregionaleconomiessuchasFiji. Inthiscontext,GovernmentwillundertakeafeasibilitystudyonthepotentialbenefitofMTECinaddressingitsdevelopmentneeds,especiallyintheareaofTradeinServicesandLabourmobility.

Policy Measures

Intheareaoftradenegotiationsandagreements,theGovernmentwillimplementpolicymeasuresoutlinedintable5.2 below.

Table 5.2 Policy Measures on Trade Negotiations and Agreements

WTO

• KeepthepossibilityofseekingWTOmembershipunderreviewwhile,fortheimmediatefutureatleast,focusingattentiononcapacity-buildingandtakingadvantage of opportunities accorded by regional and other trade agreements to which Kiribati is a party or currently negotiating.

• KeepabreastofrelevantWTOdevelopmentsthroughthePacificOfficesetupinGenevathroughthePacificIslandsForumSecretariat(PIFS)asa mechanism to influenceWTOnegotiationsonissuesofconcernsuchasfisheriessubsidies.

• ParticipateinWTO-organisedcapacity-buildingactivitieswherepossible.

EPA• Continue to explore the best market access options to the EU market that providesustainableandcosteffectivemarketsforitsproducts.

•ConsideraccessiontoIEPAbasedonacostbenefitanalysis,takingintoaccount existingmarketaccessandtheimplicationsofpotentialLDCgraduation

PACER Plus • ImplementpolicymeasurestofasttracktheratificationofPACERPlusagreement

• Implement Policy Measures to facilitate the maximisation of development benefitsrelatedtoPACERPlus

PICTA Trade in Goods

• Implement measures to assist the private sector to take full advantage of PICTA Trade in goods.

PICTA Trade in Services

•FacilitatetheratificationofPICTATradeinServices(TIS)• Build the capacity of the private sector to fully take advantage of PICTA TIS.

PICTA TMNP • AnalysepotentialgainsforKiribatiforTMNP,givendevelopmentsinPACERPlusvis-à-visdevelopingbilateralarrangementswithspecificFICstoenhancelabour mobility.

MTEC and SIS Policy • UndertakefeasibilitystudyonthepotentialbenefitsofMTECinaddressingKiribati’sdevelopmentneeds,especiallyinareasofTradeinServicesandLabourmobility.

• Implement measures to facilitate free movement of persons among the SIS

Future trade Agreements

• Analysepotentialexportdestinationswiththeviewofensuringcosteffectivemarket access opportunities.

•UndertakecostbenefitanalysisforallenvisagedFTAsortradeagreementsto ensure that overall potential gains be the basis for participating in any potential trade agreement.

30 31TPF 2017-2027 TPF 2017-2027

6. Breaking Down Barriers to Private Sector Development in Kiribati6.1 Overview of the Current State of the Private Sector in Kiribati

A prosperous and wealthy Kiribati requires a vibrant, dynamic and efficient private sector. The Government,throughtheKV20,recognisestheessentialroleoftheprivatesectorastheengineofeconomicgrowth.TheKV20seeks to develop an inclusive private sector through variouspolicies. At present, theprivate sector is relativelyunderdeveloped inKiribaticomparedwithothercountries,although ithasseensomegrowth inrecentyears.Aprominentfeatureisthattheprivatesectoractivityisunevenlydistributedacrossthecountry,withalmost80percentofbusinessesregistered inSouthTarawa,anda further10percent inKiritimati (Figure6.1).Businesses inKiribatiarealmostallSMEs.Whilethereareapproximately2,000businessesinthecountry,onlytwoemploymorethan 200 people.

Figure 6.1: Number of Registered Businesses per Island

Source: MCIC Business Registry, 2017

Nevertheless,privateformalsectoremploymenthasincreasedrecentlyatarateofover12percentperyearsince2010.Asaresult,theshareofprivatesectoremployeesintheworkforcehasgrownfrom24percentin2010,to35percentin2017.However,thegrowthisfarbelowtheaverageinmostcountries,andmeansthatalmosttwo-thirdsof jobs in the formal economy are still public sector positions.

Atthesametime,formalsectoremploymentasmeasuredbyKiribatiProvident Fund (KPF) contributors most likelyunderestimatesoverallengagementsignificantlyintheprivatesector,duetothehighlevelofinformalsector activity in the country (Figure 6.1.1). There are more workers in the informal sector than in the formal economy. The 2015 Population Census suggests that approximately 60 per cent of Kiribati’s working population ofaround25,000arenotKPFcontributors.Theyworkinoccupationsfromcopra-cuttingtofishermen,tomarketstallworkersandpredominantly-femalehandicraftworkers.

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32 33TPF 2017-2027 TPF 2017-2027

Developing the private sector is closely linked to reforms and the overall business environment in Kiribati. SMEs needs an environment inwhichGovernment involvement is limited to addressingmarket failures and fulfillingpublicpolicygoals.Whereregulationsarerequired,businessesrelyonpredictable,fairandcost-efficientprocessesandproceduresbeinginplaceinordertomakethecorrectinvestmentdecisions.Inthiscontext,thereisaneedtoimplementmeasurestoensurethatthevoiceoftheprivatesectorisfullyrepresentedindecision-making.Aprivatesectorconsultativemechanismforpublic-privatedialoguethereforeneedstobestrengthened

Policy Measure

Inordertoenhancepolicycoherenceandthevoiceoftheprivatesector,theGovernmentwill:• Strengthentheimplementationoftheexistingpublic-privatepartnershipdialoguebetweentheKiribatiChamber

of Commerce and Industry (KCCI) and MCIC to enhance policy coherence and feedback from the private sector on possible regulatory constraints.

6.2 Creating the Space for the Private Sector through Reforming State Owned Enterprises

A key overall issue for private sector development in Kiribati is the relationship between the Government’s role in the economy through State Owned Enterprises (SOEs) and issues around competition. The Government has adoptedapolicyof transferring lessstrategicSOEs toprivateownership,whileat thesame time improving theefficie2ncyoftheremainingonesthroughSOEreforms.SuchreformshavebeenspearheadedbytheSOENationalMonitoring and Advisory Unit (SOEMAU) under the MFED. Kiribati is now considered to be a leading reformer in the PacificonSOEs,asaresultofsuchreforms.Someofthekeypolicychallengesaffectingtheprivatesectorinrelationto the management of SOEs are the universal VAT Exemptions of SOEs. The VAT exemptions are said to be giving undueadvantagetoSOEsinsomesectors,wheretheprivatesectorhassubstantiveinterest.

WhiletheGovernmentpolicyistomaintainsomeSOEs,thereisaneedtoassessandimplementPolicymeasuresthatcreatealevelplayingfieldamongSOEstotheextentthatthepublicpolicyobjectivesaresustained.Thereisalso a need to strengthen the performance of SOEs by having them operate on a more commercial footing.

Policy Measures

InordertostrengthentheperformanceofSOEs,theGovernmentwill:• EnsureStateOwnedEnterprisesareonamorecommercialfootingthroughreviewandeffectiveimplementation

oftheSOEAct2013;and• ReviewtheVATexemptionpolicy toensurea levelplayingfield,whileat thesametimebalancing thepublic

policyobjectiveforstrategicSOEsinordertoenhancealevelplayingfield,especiallyinthosesectorswheretheprivatesectorcanalsoplayasignificantrole.

Figure 6.1.1: Formal Sector Employment, 2009-2016 6.3 Company Law and Business Registration Reform

Businesses are the lifeblood of a dynamic private sector-led economy. In particular, SMEs are acknowledgedworldwide as a driving force for economic growth because of their innovative and entrepreneurial nature. By taking steps to encourage the registration of existing private businesses, and the creation of new ones, Governmentcan spur investment, createnew jobs, and increase tax revenues.Movingbusinesses from the ‘informal’ to the‘formal’sectorwillalsomakeiteasiertoputinplacetherightregulatoryregimesforbusinessesindifferentareas,for example requiring certain operating standards, from proper account-keeping, to safety standards and thepossession of insurance.

For businesses themselves, there are numerous advantages and benefits that comewith registering, includingaccesstotheformalbankingsystemandinstitutionssuchascourts,theabilitytosigncontractswithotherparties(and therefore bid for supply contracts awarded by Government or other businesses) and the ability to import and export.Bothownersofbusinessesandtheiremployeeswillbenefit,forexample,frommembershipintheKiribatiProvident Fund.

The Kiribati Doing Business Report 2017 shows that starting a business is slow, costly and administrativelycumbersome in Kiribati. A diagnostic analysis of the company and business registration undertaken in 2014 recommended the need to implement measures to improve the business registration system.

Government has commenced the review of Company Law and the business registration systemwith technicalsupport from the ADB Private Sector Development Initiative (PSDI). Government will continue to implement policy measures to strengthen the business registration process with the view of improving the ease of doing business in Kiribati.

Policy Measures

Inordertoimprovethebusinessregistrationsystem,theGovernmentwill:• ReviewCompaniesOrdinance1979andtheRegistrationofBusinessNamesAct1988;• Consider the implementation of an online business registration system, bearing in mind the level of ICT

development;• Establishasinglewindowbusinessregistrationsystem;and• Developane-commercepolicyande-transactionlegislativeframeworktosupporte-filingbasedone-commerce

evidence.

6.4 Cooperative Development

Cooperative development can be a good vehicle through which the community can generate income and improve livelihood. Strengthening the performance of cooperatives can support the Government in achieving development aspirations as envisaged in the KV20. Cooperatives can provide a good platform through which the community can exploittheopportunitiesintheproductivesectorslikeFisheries,TourismandCoconut.

The vision of the Government is to use cooperatives as instruments for promoting private sector activity and sustainabledevelopment,especiallybyenhancing their capacity toaddvalue toproducts in thepriority sectorswhere Kiribati has comparative advantage.

Whilethereissignificantpotentialinusingcooperativesasavehicleforsustainabledevelopment,theperformanceofthesectorisconstrainedbypoorgovernance,attributedtooutdatedcooperative-relatedlegislativeframework.Inaddition,160outof200cooperativesarecopraagents,while22areprimarilyconcernedwithcargoandhandling,withonlya few in thekeyproductivesectors likefisheriesandservice-related industries.Anotherkeychallengeis the lack of a National Cooperative Policy to act as a holistic framework to guide Government towards more sustainable development of the cooperative sector.

Source: National Statistics Office

34 35TPF 2017-2027 TPF 2017-2027

Policy Measures

Inordertostrengthenthedevelopmentofcooperatives,theGovernmentwill:• FormulateaNationalCooperativePolicythatsupportsvalueadditionandprudentmanagementofthesector;• Reviewandeffectivelyenforcecooperative-relatedlegislationstoenhanceeffectivegovernanceofthesector;• Implementfinancialliteracyprogrammeswhichallowcooperativestobetransparentandprudentthusensuring

sustainability;• Promotetheestablishmentofcooperativeinkeyproductivesectorslikefisheries,agricultureandotherservice-

orientedsectorindustries;and• Implement awareness programmes to encourage cooperatives to take advantage of various Government

incentives to increase their capacity in value addition.

6.5 Investment by I-Kiribati at Home

Investment is the central building block of growth and prosperity, both for businesses and for Kiribati as awhole. At a global level, rates of investment are closely linked to rates of economic growth and development.Kiribatihasexperiencedalowlevelofdomesticinvestmentovertheyears.Lowlevelsofprivateinvestmentandentrepreneurshipareattributedtothehighcostoffinanceandlimitedaccesstocredit,particularlyforlow-incomeearnersandthosewithoutformalsectorsalaries.Problemsinaccessingfinancehaveanegativeimpactonbusinessstart-ups.

Domestic investors face specific types of constraints. Firstly, they require opportunities to invest,which in turnrequiregrowingmarketsandapredictableeconomicenvironment.Secondly,domesticinvestorsarelimitedintheirability to invest. They lack access to credit at a conducive rate of interest that would make investment attractive. Finally,entrepreneursalsolackskillsandknow-howtogrowtheirbusinesses,includinghowtheycanbranchoutinto new products and services as indicated in Figure 6.5.

Figure 6.5 Investment-Growth Cycle

The Government’s overall policy is to encourage private investment through increasing opportunities and abilities to invest.

Policy Measures

Inordertofosterdomesticinvestment,theGovernmentwill:• Design and implement financial inclusion programmes in line with best practice from other Pacific Island

Countries;• Enact financial sector legislation and establish an oversight institutional framework, considering Kiribati’s

commitmentsunderregionaltradeagreements;• ReviewSMEpolicyandregulatoryframeworktowardsthedevelopmentofbusinessservices; Harmonise,developandimplementaspecificfinancingschemeforSMEsinordertoimproveaccesstofinance;

and• Implementbusinessawarenessprogrammesonthebenefitsofregisteringbusinessestofacilitategraduation

from informal to formal sectors, thereby widening the tax and revenue base as well as the coverage ofenterprises.

6.6 Encouraging Inward Investment to Kiribati – A Simpler, Quicker System

Foreign Direct Investment (FDI) is an essential pillar in increasing private sector development and fostering economic growth.FDIcanprovideasourceofmuch-neededcapitaltothecountry,whichinturnfinancestheconstructionof physical facilities or the purchase of goods and services. FDI can also introduce essential skills and knowledge thatcannotbefoundlocally,suchasspecialisttechnicalknowledgeofparticularindustriesorprocesses.Foreigninvestors can also bring a deep understanding of their own home markets as well as connections to international value chains. FDI can lead to increased availability of new or cheaper goods and services that increases choice amongconsumers.Increasedcompetitioncancreatedynamicefficienciestoprovidebetterservices(forexampleintelecoms).ForeigninvestmentgeneratesemploymentforI-Kiribati,andthetwolargestprivatesectoremployersinKiribatiarebothforeigninvestments,i.e.KiribatiFishLimitedandATHKL.

Nevertheless, attracting foreign investmenthasbeenextremely challenging forKiribati.Over the last fewyears,only 5 to 6 applications are received on average each year. The total number of foreign investments applications received between 2012 and 2016 was 29. Closer analysis of the available data also depicts that not all approved foreignenterprisesareeventuallyestablished.Forinstance,outoftheaveragetotalapplicationsreceivedeveryyear,onlyoneortwoforeigninvestmentsareactually established and commence operation

Figure 6.6 FDI Applications

Source: MCIC,*2017 Figures Jan-July

36 37TPF 2017-2027 TPF 2017-2027

Asaresult,only21foreigncompaniesarecurrentlyoperatinginKiribati.Intermsofownership,sevenoftheforeigncompaniesoperateunderajointventurearrangement(eitherwithGovernmentoraprivateI-Kiribatipartner)whilefourteen companies are 100 per cent foreign owned. Foreign investment in Kiribati is regulated under the Foreign Investment Act 1985 (and subsequent amendments). The Act establishes a Foreign Investment Commission (FIC) madeupoftenseniorGovernmentofficialstoassessforeigninvestmentapplicationsandrelatedactivitiessuchaspost-establishmentmonitoringof foreigncompanies.Whenappraisingandevaluatingtheforeign investmentapplications(forinvestmentsofuptoAUD$250,000)theSecretariattotheFICreliesoncriteriasetoutintheForeignInvestmentAct.TheGovernment’spolicyistosupporttheestablishmentoflong-term,sustainableandbonafideforeign investment that is in line with its development objectives as envisaged in the KV20.

Inorderto improvetheinflowofFDI,theGovernment intendstodevelopabroadInvestmentPolicyFrameworktoharmonisepoliciesand regulations relating to foreign investment, including those relating to landand thoseregulatingbusinessactivities,forexampleattheindividualsectorlevel,oratthelocallevel.TheForeignInvestmentAct1985will alsobe reviewed toensure that itbuilds investor confidenceand is in linewith internationalbestpractices and international obligations.

Policy Measures

InordertoattractForeignDirectInvestment,theGovernmentwill:

• FormulateandimplementinvestmentpolicyframeworkinlinewithKV20;• ReviewtheForeignInvestmentActinlinewiththeInvestmentPolicyFramework;• Strengthen investment coordination mechanisms across relevant Government ministries and departments at

nationallevel,andtheprivatesectoraswellasregionalinstitutionstoidentifyanddevelopinvestmentplaninlinewithKV20;

• IncreasefundingandcapacitywithintheGovernmenttoenhanceinvestmentpromotion;• Implement investment promotion programmes through overseas missions, regional investment promotion

agencies and other online promotion initiatives

6.7 At the Border – Facilitating Trade

Thetradecostincurredbylocalexportingcompaniesreducestheirprofitabilityandtheamounttheycaninturnpay local producers. The trade costs incurred by importers are ultimately borne by the consumer at the store. While KiribatiabolishedimportdutiesandadoptedtheVATsystem,costsrelatingtotheshipmentandclearingofgoodsare still considered high barriers to international trade.

The lead Government agency involved in the clearance process is the Kiribati Customs Administration and Enforcement (KCAE), which is a division under the Ministry of Justice (MOJ). Other agencies that are primarilyinvolved intheclearanceprocessaretheQuarantinedivisionwithintheAgricultureandLivestockDivision(ALD)oftheMinistryofEnvironment,LandsandAgricultureDevelopment(MELAD),theMinistryofHealthandMedicalServices(MHMS),theMinistryofFisheriesandMarineResourceDevelopment(MFMRD),KiribatiSeafoodVerificationAuthority, which is involved in the export clearance process for fisheries products, Environment ConservationDivision(ECD)oftheMinistryofEnvironment,LandsandAgricultureDevelopment(MELAD),KiribatiPortsAuthority(KPA)andtheMinistryofCommerce,IndustryandCooperatives(MCIC).

WhileKCAEisregardedasthekeyorganisationinvolvedwithfacilitationoftrade,therespectiveindividualagencieshave their own regulatory environment where all individual border agencies have their own systems and processes to enforce their regulatory requirements. Kiribati does not have a single window system for trade clearance and tradefacilitation.Lackofasinglewindowsystemcontinuestobeanimpedimenttotradeasitcreatesunnecessaryred tape and duplication of processes.

Thekeychallengesarerelatedtoinefficienciesintradefacilitationduetoalackofintegratedandinefficienttradeclearanceprocesses,proceduresandsystemswhichinevitablyincreasethecountry’stradecosts.KiribatiispartytoregionalFTAslikePACERPlusandPICTA,andsoitneedstomakedomesticpolicyadjustmentsinordertoeffectivelyimplement its obligations under Customs procedures related to those agreements. While Kiribati is not a member oftheWTOTradeFacilitationAgreement(TFA),itspolicyobjectiveistoalignitscustomsprocedureswiththeWTOTFA.

Overall, Government policy is to implementmeasures aimed at reducing the complexity and cost of the tradetransactionprocess,streamliningtradeproceduresinordertoreducetheriskandtransactioncostandenhancingtheefficiency,transparencyandpredictabilityofinternationaltradeasmeasuredintimeandmoney.

Policy Measures

Inordertoachievetheaboveobjectives,theGovernmentwill:• Develop a mechanism to ensure that all authorities and agencies involved in border and other import and export

controlpointscooperateandcoordinateinordertofacilitatetrade;• ImplementcustomsproceduresthatarealignedtotheTradeFacilitationAgreement(TFA);• Adoptatradefacilitationsystemrequiredbyimportingcountries(i.e.TRACESSystem);and• Implement policy measures to support the effective implementation of the country’s obligations related to

customs procedures in regional trade agreements.

6.8 International and Domestic Shipping – Consistent, Reliable and Cost-effective Shipping

Regular, reliable and cost-efficient shipping is essential for small island countries such as Kiribati, due to theirdependence on it and to facilitate exports in sectors where Kiribati has a comparative advantage.

Container Yard, Kiribati Ports Authority

Traditional Canoe Servicing the Lagoon in Buota

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6.8.1 International Shipping

KiribatihasbeenamemberoftheCentralPacificShippingCommission(CPSC)alongsidetheRepublicofMarshallIslands,NauruandTuvalusinceJanuary2014.TheCPSCregulatestheprovisionofshippingservicesbasedona‘controlledcompetition’model,withtheintenttoimprovethereliability,affordabilityandsustainabilityofshippingservices.TheCommission’sprimarygoalistoensurecentralPacificIslandersareabletoaccessbasicfooditemsandotheressential commodities to support their livelihoodsandeconomicactivities ina timelyandaffordablemanner,whileprovidinganenablingenvironmentforinternationalshippinglinestosucceed.

AlthoughtheCPSChasbeeninoperationforonlythreeyears,ithasledtoanincreaseinthenumberofcallsbyshipsintoKiribati,andintheconsistencyandreliabilityoftheservice.Asaresult,onwardconnectivityhasincreasedto internationaldestinations,andfacilitated intra-regionaltrade,contributingtoanotable improvement intradeperformance.Whiletheevidencewithrespecttoreducedfreightcostsismoremixed,Governmentwillcontinuetomonitor freight costs to ensure that the CPSC arrangement delivers competitive international freight rates.

6.8.2 Domestic Shipping

TherearetwointernationalseaportsinKiribati,BetioandKiritimati.BetioPortwasfirstexpandedbetween1998and 2000 with the provision of a reclaimed land area as a container yard. Betio Port was further developed between 2012 and 2014, through Japan’sODA to accommodate berthing of internationalmedium-sized container ships.KPA’s container yard at Betio is currently running out of space as the volume of imports has increased to AUD$14 Million.Ontheotherhand,theportinKiritimatiisonlygoodforusebysmallfishingboatsduetosedimentationandcoralregrowthwithinthechannelconnectingLondonPorttotheopensea.

Theseaportsontheouterislandsexistonlyintheformofnarrowchannelscutthroughthereef-flat,withdocksinonlyaselectfewislands,butmostlywithoutproperfacilitiesandequipment.Asaresult,shippingoperationsareinefficient,cumbersomeandunsafe.Inworstcases,vesselsoffloadpassengersandcargoesmilesoutatseaontosmalloutboardmotorboatswhichthenhavetotraversetheexpansivereefflatstotheshore.Thisoperation isrestrictedtohightide,contributingtoprolongedshippingturnaroundtimes.Inbadweatherandroughseas,thiskindofoperationisextremelyriskyandcasesofinjury,deathandcargolosshavebeenexperienced.

Domestic sea transport is largely dominated by the private sector though their presence is only prominent in lucrative sectors. Kiribati National Shipping Line (KNSL), a Government-owned shipping company, focuses onproviding shipping services to those routes not considered to be lucrative by private sector shipping services.

Connectivity and accessibility to the outer islands from the capital (South Tarawa) is challenging due to inadequate infrastructure(wharves,ramps,piersandports)andboatchannelsandpassages.Otherchallengestothedomesticshipping industry include a lack of published or advertised service schedules. Information problems mean that the boats do not coordinate their

activities in order to bring back agricultural produce,whilemany of the outer islands are inadequately served,leading to cargo shortages from time to time. Strengthening the National Shipping Council (NSC) could help improve coordination in the shipping industry.

The key challenge facing the Government is the need to improve connectivity and accessibility of shipping services inordertofacilitateinternationalandinter-islandtrade.

Policy Measures

Inordertoimproveconnectivityandaccessibilityofshippingservices,theGovernmentwill:• Continue the implementation of the CPSC agreement with the view of improving shipping services in the region

whileassessingtheirlong-termsustainabilityandimpactonfreight;• Developalegislativeframeworktoreinforcetheimplementationofshippingschedules;

• Adopt the Private Public Partnership (PPP) framework in developing the domestic shipping industry as recommendedintheNMTP;

• Implementpolicymeasuresincludingslipway,drydockandotherportfacilitiesontheouterIslandsthatwouldsupporttheoperationofbiggervesselsservicingtheouterislands;

• Implementmeasurestoimprovetheshippingconnectivitytotheisletsontheouterislands;and• Implementmeasuresto improvetransparencyandefficiency in the implementationof thefreight levywitha

view to meeting the overall intended policy objective.

6.9 Air Services – Improving the Frequency, Reliability and Affordability of International and Domestic Freight and Travel

AirtransportationplaysacrucialeconomicandsocialroleinKiribati’sdevelopment.Thefuturegrowthoffisheriesexportsandthedevelopmentofthetourismsectordependentirelyontheavailabilityofreliableandaffordableairfreightandpassengerservices.AirtransportationisessentialinimprovingtheparticipationoftheI-KiribatiinvariousLabourMobilitySchemes.ConnectivityoftheshippingservicesisalsoessentialfortheintegrationofthepopulationlivingintheGilbertGroupandalsoprovidingaconnectionbetweentheotherwidely-dispersedislandsin the country.

AirtransportationisalsoanimportantmeansforimprovingtheavailabilityoffreshproducewithinKiribati,whetherthesearesourcedfromoverseas,ortoassistinthedevelopmentofdomesticmarketsforproducebroughtfromthe outer islands to population centres. Government services depend on air connections between the capital and outerislands,whilebetterconnectionswouldalsoboosttheabilityofprivatebusinesstoexpandoperationsacrossthecountry.Finally,havingnationalair transport infrastructure thatmeetsminimumstandards isalsoessentialduringanyreliefeffortresponsetoamajoremergencyornaturaldisaster.

There are two international airports in Kiribati (Bonriki and Kiritimati) and 19 domestic airports among the outer islands.AirKiribatiLimited (AKL) is theonlyairlineservicing thedomesticmarket inKiribati.TheAirline is100%Governmentowned.Ithasafleetoffouraircraft–onetwinotterandthreeY-12’s.Fleetcapacityisinsufficienttomeet the current domestic demand for air services. This situation is compounded by the poor condition of runways and the lack of reliability of jet A-1 supply, bothwhich causeoccasional flight disruptions. There is oneprivatecompanyprovidingairservices,butitdoesnotplayaprominentroleindomesticairtravel.

TherearethreeavailableroutesforinternationaltravelthroughHoniara,NauruandNadiwhichareoperatedbysingleoperators(SolomonAir,NauruAirlines&FijiAirways).Governmentrecognisesthatthepassengerandfreightcapacityinairservicesarelimited,unreliableandexpensive.Inordertoimprovetransportconnectivitythroughairtransport,theGovernmentintendstopurchaseDash-8aircrafttocomplementtheexistingdomesticairservicesand pave the way for international services. The Government will also explore options to increase the capacity for international services and negotiate air service agreements with other countries to promote competitive air services andtowideninternationalaccessinsupportoftradeandlabourmobilityandeco-tourismasenvisagedintheKV20.

Air Kiribati domestic aircraft, Tabiteuea North

40 41TPF 2017-2027 TPF 2017-2027

Policy Measures

Inordertoimproveairtransportconnectivity,theGovernmentwill:• Increase freight and air passenger capacity through strategic air service agreements with neighbouring countries

andairlinesonthebasisofefficiencyandsustainabilityofairservices;• Improvethecapacityofdomesticflights,includingoptionsforincreasingthecapacityofAirKiribati;and• Develop a storage warehouse facility at the airport to facilitate trade through Air Freight Services.

6.10. ICT, E-Commerce and Trade

The use of information and communication technology (ICTs) in commercial activities serves to enhance trade and investment facilitationbysimplifying,harmonisingandnormalisingprocesses inaneffort to reducedelays,bottlenecksandcosts.Asaresult,e-commercemethodscanservetoenhancetradeasitcanresult inefficiencyimprovements,greatertransparencyandaccountabilityandthereductionofcostsassociatedwithhumaninterfacerequirements and human errors. The ability to electronically track and log transactions can also serve to minimise corruption,whichcanresultfrominteractionbetweenandamongimport/exportstakeholders.WhileICTpresentsa goodopportunity for facilitatinge-commerce, the lowpercentageof internetpenetrationand lackof apolicyand regulatory framework to support the development of e-commerce is amajor challenge. Other challengesinclude limited awareness among stakeholders on the linkages between ICT and trade. The Government’s broader development policy is to improve internet and mobile connectivity on the outer islands in order to realise key developmentoutcomes,whicharerelatedtothedigitaleconomyandspecificallytradeande-commerce.

Policy Measures

• Promote the use of e-commerce by the business community, taking into consideration their low level ofawareness,lowlevelofaccessandusageofICT;

• Implementmeasurestoimprovetheinternetandconnectivityontheouterislands;and• Developandeffectivelyimplementane-commercepolicyandregulatoryframework.

6.11 Competition and Consumer Protection

The Price Ordinance was enacted in 1981 as a regulatory mechanism to control the prices of essential commodities. The overall policy intention of the Kiribati system is to ensure an adequate level of competition in the wholesale andretailmarketsforgoodsthataredeemed‘essentialneeds’fordailyliving,whilealsorespondingtotherealitythat achieving sufficient levels of competition is difficult givenKiribati’s circumstancesof havingmany separateandisolatedsmallislandeconomies.Generally,theGovernmentpolicyistoreviewandmaintainpricecontrolsforessentialcommodities,whilestrengtheningthemonitoringaspectsofthepricecontrols.

Onabroaderlevel,manydevelopingcountrieshavenowmovedtowardsputtinginplacestrongercompetitionlawsasthekeypolicyinstrumenttopreventfirmsfromabusingtheirmonopolyordominantposition.Whileenactingacompetitionlawmaybeanoption,thiswouldrequireanincreaseintechnicalcapacitytorespondtocomplaintsandundertake investigations. Inthiscontext, theGovernmentwillundertakeacost-benefitanalysis,basedonabroad-rangingmarketassessmenttounderstandtheconcernsthatwouldjustifyacompetitionlaw.

Beyondcompetitionissues,theGovernmentwillalsostrengthentheconsumerprotectionframeworkbyundertakingareviewoftheConsumerProtectionAct2001andcarryoutspecificawarenessprogrammes.

Policy Measures

Inordertostrengthencompetitionandtheconsumerregime,theGovernmentwill:• Review price control regimes with a view to ensuring consistency with trade policy objectives while meeting

intendedpublicpolicyobjectives;• ImplementpolicymeasurestostrengthentheimplementationandmonitoringofthePriceOrder;• Considertheadoptionofacomprehensivecompetitionpolicyframework;• ReviewandstrengthenconsumerprotectionenforcementlegislativeframeworkinlinewiththeNationalQuality

Policy(2017-2023);and• Implementconsumerprotectionandawarenessprogrammesforeffectiveimplementationofthelegislation.

6.12 Standards and Quality Infrastructure System

Astraditionaltariffbarriershavedecreasedaroundtheworldinrecentdecades,standards(includingquarantine,food safety and technical product standards) have emerged as some of the most important barriers to trade in today’s trading environment. Any company with high ambitions needs to adopt and comply with relevant internationalstandards.TheGovernmentplaysakeyroleinsetting,promotingandenforcingstandardsforgoodsandservicesacrosstheeconomy,giventheneedforregulationandpublicinfrastructure.Inacontextofglobalisedtrade,thesettingupandoperationofaneffectiveandcredibleQualityInfrastructureSystem(QIS)isthereforenota choice but a necessity for Kiribati to participate fully in regional and international trade.

Whilecomplyingwithinternationalproductstandardscanbecostly,itcanbringsubstantialrewardsininternationalmarkets,mostnotably forKiribatifishexports.Standardsarealso important for services including tourism, thefoodindustry,lightmanufacturingandfirmmanagement.Betterconstructionstandardswouldimprovethesafetyof infrastructureandbuildings inKiribati,andacultureofapplying internationalstandardsalsocreatesbenefitsfor construction workers if they seek overseas employment in line with KV20. Technical standards also play an importantroleinmining,shouldKiribatidevelopaseabedmineralindustry.Finally,strongstandardscanplayakeyrole in protecting domestic consumers.

The Government adopted a comprehensive NQP in 2017-2023. The goal of the policy is to realise an effectivenationalQIScapableofraisingthequalityofproductsandservices,thusboostingthecountry’sexport-ledgrowthwhileprovidingforbetterwell-beingamongI-Kiribati.TheNQPoutlinesanumberofspecificpolicymeasures.Ingeneral, theGovernmentpolicy is toestablishandstrengthenanationalquality infrastructuresystem formorereliabletradingofgoodsandservices,especiallyforprioritysectorslikefisheriesandtourism.

Policy Measures

Inordertostrengthenthenationalqualityinfrastructure,theGovernmentwillimplementpolicymeasureswithaviewtostrengtheninginfrastructureinthefollowingaspectsasrecommendedintheNationalQualityPolicy(2017-2023):•StandardsandQualityPromotion;•RegulatoryFramework;;•TestingLaboratories;•Certification;• Accreditation•Metrology;•FisheriesandAquaculture;•FoodSafety;•AgricultureandEnvironment;•TourismandCulture;and• Education and Human Development

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6.13 Intellectual Property

Intellectual property (IP) is an increasingly important area of trade policy. At the global level, there is growingrecognitionthatasignificantshareoftheeconomicvaluecreatedwithinparticularsupplychainscomesnotjustfrommanufacturinggoodsandproducingservices,butfromtheirinitialdesignaswellasbrandingandmarketinginitiatives.Rightsovertheownershipofintellectualpropertywhichincludeworksofartsuchasmusicandcinema,and traditional knowledge is increasingly subject to international rules to ensure that the owners of those rights are protected and rewarded for their work.

The Government recognises the need to establish and strengthen the intellectual property regime that creates economic value by protecting and rewarding owners of IP rights. Strengthening the national IP regime is expected tosupportthedevelopmentobjectivesoftheKV20,whichseekstoattractinvestmentanddevelopculturalcapital.The Government adopted a National Intellectual Property Strategy (NIPS) in February 2017 to strengthen the intellectual property regime. The vision of the strategy is to achieve amodern, well-balanced IP systemwhichenhances inclusive sustainable and economic development and supports the country’s traditions and culture. The specificobjectivesofthestrategyinclude:

• Ensure that the existing legacy IP legislation is replaced and that new legislation reflects the national policyobjectivesofKiribati;

• Investigate and decide whether new areas of IP policy and legislation should be implemented to ensure that the wholeIPapproachinKiribatireflectsandsupportsitseconomic,socialandculturalcontext;and

• Identify and address the capacity and capability issues related to implementing a national IP system in Kiribati to ensurethatthepotentialeconomic,socialandculturalvalueofthenationalIPpolicyissupportedandrealised.

Policy Measures

InordertoachievetheobjectivesoftheIPstrategy,theGovernmentwillimplementpolicymeasureswithaviewtostrengtheningthenationalIPregimeinthefollowingaspects,asrecommendedintheNationalIntellectualPropertyStrategy(2017-2023);

Copyright Geographical indications

Trademarks Traditional knowledge and cultural expressions

Patents CapacitybuildingofIP-relatedinstitutions

6.14 Land

Landisavitalfactorofproductionintheeconomy.Thetotallandareais811km²,ofwhich37percentisundercustomary landownershipand the remaining is state land, includingall islands in theLineandPhoenixGroup.Thecountry’spopulation isheavily concentrated in theurbanareasofSouthTarawa,where51per centof thepopulation lives. The performance of key growth sectors of the economy and the attachment of the communities tolandallaffectaccessandutilisationoflandinKiribati.

AlargeproportionoflandinSouthTarawaisleasedbyGovernmentforatermof99yearsundertheNativeLandsOrdinance.AgenerallanduseplanfordesignatedareasisdeterminedbytheCentralLandPlanningBoard(CLPB)established under the Land Planning Ordinance. Land tenure in state lands such as Kiritimati, Tabuaeran andTerainaisgovernedbytheStateLandsAct,2001,whichcombineslandtenurewithplanningrequirementsforthesustainable use of land resources.

Secure access to land can contribute to social and economic development and guarantees tenure which builds more confidence for investors, be they small or large.While improving land use is critical towards sustainabledevelopment,landscarcity,contestingoflandownershiptitles,andpolicyrequirementsinsubleasingGovernment-

leasedlandsfrom100%landownersaremajorobstaclestoprivatesectordevelopmentinurbanareasand,toalessextent,totheexpansionofpublicservices.

Weakmonitoring,enforcementandpoliticalgovernancechallengesrelatedtolandownershipcontributetonon-complianceofthegenerallanduseplan.Landscarcity,especiallytosupportinvestmentinSouthTarawa,impliesthat there is a need for substantive investment in land reclamation. Lack of a national land policy and weakadministrationoftherelevant legislativeframeworkhassignificantlycontributedtopoor landuse,especially forcommercialpurposes,thusaffectingtheestablishmentofforeignanddomesticinvestment.

Policy Measures

Inordertoincreaselanduseandplanningforcommercialinvestment,theGovernmentwill:• ReviewagenerallanduseplanforGovernmentownedland;• Undertakeadditionalinvestmenttoincreaselandareaforcommercialpurposesthroughlandreclamation;and• Streamline procedures to standardise landowners’ consent for obtaining land for public use and private sector

development.

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7. Linkages to Key Productive Sector Policies and Supply Capacity7.1 Agriculture

TheagriculturalsectorfacessignificantchallengesinKiribatibutplaysanimportantroleinsustaininglivelihoods,most notably on the outer islands. Agriculture supports communities in two main ways. It provides income,supportedbythetraditionalexportsofcopraandcoconutproductsandsecondlythroughwidely-practised,small-scale production at the household level. Household level production also makes important contributions to food security, nutrition,well-being and healthy lifestyles. Looking forward, growth in this sectorwill be important insupportingthedevelopmentofothersectors,notablytourismthroughsectorialvaluechainlinkages.

Figure 7.1: Trends in Exports of Coconut Products (AUD ’000’)

Source: National Statistics Office

Agriculturalexportshavetraditionallybeenlimitedtocopra,coconutoilandcoconutproducts.Thecoconutindustryis subject to its own set of institutional and marketing arrangements that have been recently reformed. Exports of coconutproductshowever,havefluctuatedinrecentyears(Figure7.1).Amajorinfluenceonproductionhasbeenheavy support from the Government through a copra subsidy scheme. The objective of the subsidy scheme is to maintain copraproduction, and to support theouter islands throughensuring employment and create a cash-based monetised economy in order to reduce rural urban drift and ensure equitable distribution of Kiribati’s income and wealth in order to support the KV20 Vision.

Whileagriculturalproductionislessproductiveduetolimitedlandavailability,poorsoilsandfragilewaterresources,there is room to improve production for crops and livestock in some selected outer islands. Possible crops may includecoconuts,breadfruit,pawpaw,banana,pumpkin,giantswamptaro,pandanusandsweetpotato.Thereisalso potential in developing livestock through piggery and poultry.

Todate,commercialisationhasbeenlimitedtoanumberofGovernmentanddonor-ledinitiativesandprogramsoperatingonasmallscalethathaveprovidedlocalmarketswitheggs,vegetablesandothersmallfarmproducts.MostoftheagriculturaldevelopmentprogrammesfundedbyFAO,IFADandSPChaveon-goingprojectsonsometargetedouter islands.TheTaiwanTechnicalMission (TTM) inparticular,at timeswork togetherwithEuropean

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GovernmentssuchasGermany,Netherlands,andItalytofundprogramsmainlybasedonSouthTarawa.Thereisa need to extend or replicate similar programmes on the outer islands with the potential of increasing agricultural production.

Whilethereisaneedtosupportthedevelopmentoftheagriculturalsectortoimprovedomesticvaluechainlinkages,thereisnooverarchingagriculturalpolicytoguidethedevelopmentofthesector.Asaresult,responsibilitiesfordifferentareasaresharedbetweenanumberofdifferententitiesincludingbetweenMCICandindustryparticipantsforcopra,theAgricultureandLivestockDivision(ALD)ofMELADforagriculturalproductionissues,andMCICfordomestic and International marketing.

Efforts to stimulate the development of the coconut sector are constrained by a lack of integrated strategicframeworktoensuresustainability intheproductionandsupplycapacity,productdevelopment,andmarketing.Lack of a policy framework has contributed to poor coordination across Government ministries and privatesectorplayers. Inthiscontext, theGovernment intendstodevelopacoconutdevelopmentstrategytoprovideacomprehensiveandlong-termresponsetoaddressingthecriticalfactorsthatwouldimpactthedevelopmentofthecoconutsector,withaviewtoensuringsignificantimpactatthecommunitylevel.

CurrentlyMELAD,withtheassistanceofFAO,hasdevelopedadraftFoodandNutritionSecurityPolicy.ThisdraftPolicyisawaitingCabinetapproval.Thepolicy’sobjectiveistoensurefoodsecuritythroughtheaccessibility,safetyandgoodnutritionfor I-Kiribatipeople.Overall, theGovernmentrecognisestheneedto implementa long-termpolicy in order to improve the supply chain and marketing of agricultural products from the outer islands to South Tarawa. Specific tools and policymeasures to achieve such an objectivewould include improving the shippinglinksandtheuseoftheGovernment’sdomesticfreightsubsidies,improvingmarketinformationaswellascurrentinitiatives to develop open integrated markets for local produce from the outer islands near Betio wharf.

Policy Measures

InordertoimprovetheperformanceofTrade,AgricultureandValuechainlinkages,theGovernmentwill:• DevelopandeffectivelyimplementtheCoconutSectorDevelopmentStrategy(CSDS);• Develop an agricultural policy which emphasises increasing supply capacity, agribusiness and commercial

production;• Promoteagribusinessand commercialisationof agriculture, includingproductionof local fruits, livestockand

vegetablesandaddresstransportationandlogistics,marketing,etc;and• Review technical cooperation agreements on agriculture with development partners to ensure a greater focus on

outer islands with potential for agricultural production.

7.2 Fisheries

Taking into account the revenue generated by fishing licenses, recently commenced direct exports of Kiribati-processedtuna,productionaimedforthedomesticmarketandsubsistencefishing,thefisheriessectorrepresentsby far the most important economic and trade sector for Kiribati. At approximately 3.5million sqkm2, Kiribati’sExclusive Economic Zone (EEZ) is among the largest in the world.

Offshore fisheries are primarily undertaken by industrial-scale vessels. Revenue derived from resource rentalstoDistantWater FishingNations (DWFN)provides a significantproportionofGovernment revenue. Since2014,fishingrightshavebeenmanagedattheregionallevelundertheVesselDayScheme(VDS),whichhassignificantlyincreasedtherevenuesfromfishinglicensesreceivedbyKiribati.Nevertheless,themigratorynatureoftunameansthatrevenuesarealsopronetolargefluctuations,whiletheVDSsystemitselfisstillinitsearlydaysofoperation.

Figure 7.2 Kiribati’s Exclusive Economic Zone

Another key development in recent years has been a commercial joint venture by the Government of Kiribati,GoldenOceanFishof Fiji andShanghaiDeepSeaFishingofChina toestablish theKiribati FishLimited (KFL) in2012.KFLprocesseshigh-valuefreshandfrozentuna(alongsideswordfishandsnapper)forexport,withafleetoftwentylongliners,supportingaround300workersdirectlyaswellasmanymorelocalfishermensuppliersthroughdomesticvaluechainlinkages.KFLstartedexportingin2013andhasestablishedexportmarketsinJapan,theUSand New Zealand.

Despitetheobviousbenefitstothelocaleconomy,currentlevelsoffishexportsofaroundeightytonnespermonthare still low in comparisonwith the revenuegeneratedbyfishing licences.KFL’s capacity to increaseexports iscurrentlyconstrainedbyanumberofsupplychain-relatedfactors,includinglimitedairfreightcapacityandlackoffacilities at the airport to facilitate exports. Expanding into the lucrative EU market will also depend on a number of marketaccess-relatedfactorsincludingmeetingSPSrequirementsandIUUregulations,maintainingtheregimeforpreferentialtariffaccess,andrulesoforigin(seesection5).

Seafood Verification Authority inspecting the fish quality

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Domesticinshorefisheriesincludecoastalandnearshore(reefandlagoon)fisheriesandplayaverysignificantroleinprovidingfoodsecurity,welfare, livelihooddiversificationandrevenuegeneratingoptionsthroughoutKiribati.ThisisespeciallyimportantforKiribati,whoselandmassisonly800km2,therebylimitingagriculturalproductionand livelihood options. Themost active commercial and artisanal coastal fisheries are based in South Tarawaas there isa significantmarketbased there,although there isalso smaller-scale commercial tradeonKiritimati(ChristmasIsland),whereexportsoftunatoHawai’iarepossibleviaairfreightandwhereinvestmentundertheKFLjoint venture is eventually looking to extend its operations.

Traditional fishing in lagoon

Aquacultureofseaweed,milkfishandbêche-de-mer (seacucumber)arealso included in inshorefisheries,whileaquaticfishandshellshavepromisingnicheexportpotential.Gamefishing,whichiscurrentlythemainattractionfortouriststoKiritimati,iscloselylinkedtotourismdevelopment.Theimportanceofinshorefisheriesinprovidingfoodsecurityintheformoffreshsourcesofproteinanditsvalueinimportsubstitutionishighlysignificant.Beyondfisheries,solarsaltfromKiritimatihaspotentialasanothermarineresourceforexport.

Inadditiontodevelopingfisheriesproducts,thereisalsopotentialforKiribatitoexpandintogreaterprovisionofservicesbothforfishingvesselsandleisurecraft.Kiribati’sfavourablelocationintheCentralPacificregion,togetherwith the fact that it lies outside the cyclone belt,make it ideal for the development of a transhipment hub. Atranshipmenthubwillrequiredevelopingthecapacityofthejettytobeabletoresupply,serviceandrepairfishingandothervessels inthesub-region, includingpurseseiners, long-liners,smallfishingvessels, ferries, inter-islandtransportation and pleasure vessels such as cruise ships and yachts.

Policy Measures

Inordertomaximisereturnsfromfisheriesandmarineresources,theGovernmentwill:• Implement theNational Fisheries Policy (2013-2025)with an emphasis on ensuring food security and safety,

sustainablelivelihoods,long-termconservationandstrengtheninggovernanceinthesector;• Implementnon-discriminatoryinvestmentpolicyincentivestoattractinvestorsinthefisheriessectorandmarine

resourceslikesolarsalt;• Developairportfacilitiestosupportfishexports;• InvestinfishingvesselsinordertomeettheSPSregulationsinexportmarketsliketheEU;• Work with outer islands in promoting investment in integrated catching and processing and facilitating exports of

value-addedfisheriesproducts;• Implementpolicymeasurestosupportthedevelopmentofaquaculture;and• Implement policy measures to support the establishment of a transhipment hub in Betio and Kiritimati.

7.3 Tourism

TourismhassignificantgrowthpotentialinKiribatiandhasbeenidentifiedbyGovernmentashavingthepotentialto provide employment and income generation, as well as supporting the retention of cultural traditions andthe sustainable management of the nation’s environmental assets. In particular, the potential for developingKiritimati (Christmas Island) as the country’s primary tourist destination highlights the chance to spread economic development andwealth beyond Tarawa.Over time, the development of tourism across the country can bringbroaderbenefitsasasourceofdynamiceconomicgrowth.Ahealthytourismsectorcanspurincreasedtransportlinkages,bringdowncostsofgoodsbyenlargingthemarket,andsimilarlyenablegrowthofothersectorssuchasfisheriesandagriculturetoservicethetourismindustry.

Tabontekeke ECO-Resort

50 51TPF 2017-2027 TPF 2017-2027

Figure7.3showsthatoutofarecenttotalofaround5,000visitorarrivals,around1,400werefortourismpurposes.StatisticsfromtheKiribatiNationalTourismOffice(KNTO)suggestthatthereisasignificantdifferenceintheprofileof visitors who arrive on Tarawa and those who arrive on Kiritimati. Around 75 per cent of arrivals on Kiritimati are tourists(withasignificantproportionofthosefromtheUS)whotravelmainlyforbonefishing,birdwatchingandsurfing.

Figure 7.3. Visitor Arrivals to Kiribati by Purpose, 2000-15

Source: Kiribati National Tourism Office

OtherpotentialnichemarketslikethePhoenixIslandProtectedArea(PIPA)andotherouterislandsremainunder-exploited. The I-Kiribati are known to be culturally and ethnically homogeneous with a shared genetic history,culturaltraditions,values,historicalexperienceandlanguage.TraditionalknowledgeandculturalskillsarearichresourceforKiribati.CultureisimplicitintheKiribaticommunity,althoughitsintrinsicvaluetendstobeoverlooked.Whileeachislandhasitsownculturaltraditionsandexperience,economicvaluethroughculturaltourismremainsunexploited.

Marketing Kiribati to inform tourists on potential attractions and facilities also remains a key constraint to tourism development.Tourismpromotion-relatedwebsitesremainunder-developedandinformationisoutdated.Alackofdive operators also creates a major gap in the array of tourism products available.

While therearepotentialopportunities fordeveloping tourism in linewithKV20, there isno formaloverarchingtourismpolicyorlegislativeframeworktoguidethedevelopmentofthesector.TheKNTO,whichislocatedwithinMICTTD,has responsibilitieswhich includemanaging largeportfolioofproject-based infrastructure investmentsandresultantrecurrentexpenditures(suchasmaintenance),aswellaspolicyandregulatoryfunctionsintheareasofinfrastructure,communications,andtransport.

Freshwater lake, Teraina (Washington Island)

Inaddition,tourismdevelopmentrequiresspecialistknowledgeoftourismvaluechains,coordinatingtheimplementationofarangeofdifferentpolicies,andworkingwithdifferentstakeholderstosupportthedevelopmentofKiribati’smarketinternationally,aswellasindividualtourismbusinessesatthelocallevel.Inthiscontext,thereisaneedtoreviewwhereKNTOsitswithintheGovernmentset-upforeffectivevaluechainlinkages and implementation of tourism policies.

Policy Measures

Inordertodevelopsustainabletourism,theGovernmentwill:• IncreaseawarenessofKiribatiandtheyieldfortourismproducts;• ImplementmeasurestosupportthedevelopmentofculturaltourismontheouterIslands;• Supportinvestmentinhighyieldtourismproducts;• BuildtourismandhospitalityhumanresourcecapacitywithinKiribati;• Improveinfrastructureconnectivityandaccessibilitytosupporttourism;• Improveaccesstoutilityandsocialinfrastructuretosupporttourismdevelopment;• Implementinvestmentpolicyincentivestoenhancebusinessdevelopmentinthetourismsector;and• Review where KNTO sits within the Government set-up to ensure it can most effectively coordinate and

implement tourismpolicies,andcompeteforsufficientresourcesfromGovernment.

7.4 Labour Mobility

Kiribati has a longhistory of labourmigration.Historically, a largenumberof I-Kiribati havebeen employed asseafarers.Kiribati’sMarineTrainingCentre(MTC)isaworld-classmarinetraininginstitutionwithmanygraduatesemployedindeckandengineeringpositionsbytheGermanshippinglineSouthPacificMarineServices(SPMS).In

52 53TPF 2017-2027 TPF 2017-2027

2010,12.8percentofhouseholdsreceivedremittancesfromseafarersand18.3percentreceivedotherremittances.Inrecentyears,thenumberofseafarershasdeclinedduetothedownturnintheworldeconomy,ashifttowardslargershipsand increasedcompetitionfromAsianseamen(Figure7.4).Beyondshipping lines, I-Kiribatiseamenhavealsobuiltastrongregionalreputationascrewinthemarineandfisheriessectorunderaccessagreementswhich contain I-Kiribati crewing requirements, aswell as throughbeing engaged as stewards and as observersundertheForumFisheriesAgency’sregionalfisheriesmonitoringscheme.

Figure 7.4 Seamen’s Remittances, 2000 to 2016

A significant development in recent years has been access for I-Kiribati to seasonalwork underNew Zealand’sRecognisedSeasonalEmployer (RSE), andmore recently,Australia’sSeasonalWorkerProgramme (SWP).Kiribatihowever, faces competition from larger PICs with better resourced Departments of Labour, better end-to-endprocessesandcheaperair linkages.Around120-180 I-Kiribatihaveparticipated in theRSEeachyear, comparedwith1,200Samoans,1,500Tongansandover3,000ni-Vanuatu.OpportunitiesforI-KiribatimayincreaseiftheRSEschemeisextendedintothefisheriessector,whichiscurrentlybeingpiloted.

Oneimportantrecent initiative isafive-yearpilotPacificMicrostates-NorthernAustraliaWorkerPilotProgramtoprovideupto250citizens(around50peryear)fromKiribati,NauruandTuvaluaccesstoatwo-yearworkvisa(withtheoptionofapplyingforanadditionalthirdyear)toworkinless-skilledjobsinNorthernAustralia.3

Another initiativeby theAustralianGovernmentwas theestablishmentof theAustralia-PacificTechnicalCollege(APTC), offering scholarships to upgrade skills and gain internationally recognised qualifications. Around thirtyI-KiribatistudentseachyearhavegraduatedfromAPTCwithqualifications inareas includingchildren’sservices,youth work, aged care, disability, hospitality, tourism, hairdressing, automotive, electrical, carpentry, paintingandtiling.However,mostAPTCgraduatesfromKiribatiareunemployeddueto limitedopportunitiesfordecentemploymentinthecountryanddifficultyinaccessingdecentemploymentopportunitiesoverseas.OnechallengefacedbyI-KiribatiincompetinginAustraliaandNewZealandlabourmarketsisthecomparativelylowlevelofEnglishlanguageproficiency.Therearelinkagesheretobroadereducationpolicy,includingensuringfullcompliancewithKiribati’s existing policies for English to be used as the language of instruction from early grades.

3 www.dfat.gov.au/geo/kiribati/development-assistance-in-kiribati.aspx(accessed3June2017)

Finally,permanentmigrationflowstoNewZealandhavegrownrecently,asaresultofthePacificAccessCategory(PAC)Schemeintroducedin2002,whichallowsupto75I-KiribatitogotoNewZealandeveryyearforpermanentsettlement,providedtheyareabletosecureajobwithinsixmonthsofarrival.

Beyond market access, Government recognises the key role an education policy plays over the long term inimproving‘supplycapacity’,andthepotentialofI-Kiribatitoaccessdecentemploymentopportunitiesathomeandoverseas.TheGovernment,throughtheKV20,willimplementmeasurestoincreaseaccesstodecentemploymentopportunities.TheKV20vision is tosupporteffective implementationof theNationalLabourMigrationPolicy inorder to increase the number of overseas workers and create new labour markets. Government will also implement policymeasuresaimedatimprovinglevelsofEnglishproficiencyatalllevels.

Policy Measures

Inordertoincreasedecentoverseasemploymentopportunities,theGovernmentwill:• Implement the National Labour Migration Policy, which emphasises the promotion of decent employment

opportunities for domestic and overseas markets, including enhancing quality and adequate labour supplythroughtraininginstitutes;

• ImplementaneducationpolicywithemphasisonimprovingEnglishliteracyatalllevels;and• Strengthen the overall governance system in the recruitment of overseas workers.

7.5 Deep Seabed Mineral Resources

Given that Kiribati has an Exclusive Economic Zone of 3.5million km2, the potential returns from mining ofunexploited resources within the deep seabed has been the subject of increasing speculation over the years. The seabed mineral sector could be an important pillar for realising Kiribati’s vision for exploiting its resources as a LargeOceanState.TheinterestinDeepSeabedMineral(DSM)resourcesrevolvesaroundthreehighlysought-aftertypesofmineraldeposits,rangingfrompolymetallicnodules,polymetallicsulphidesandcobaltrichcrusts.

HistoricalsurveysinPICshavebeenconductedforseabedmineralresources,confirmingthepresenceofmanganesenodules,seafloormassivesulphite4,andcobaltrichcrust(withsuchdepositsinturncontainingelementsincludingnickel,copperandtitanium).Sittingseveralkilometresbelowsealevel,suchresourceswerepreviouslyinaccessible,but in recent years a combination of high demand and recent advances in mining technology have meant that seabeddepositsarealreadybecominganattractiveandfeasibleproposition,withminingsettoexpandsignificantlywithin the next few years.

Current activity is focused in three areas:• Puttinginplacethelegislativeandregulatoryframework;• SurveyandexploratoryworkonmineralresourceswithintheKiribatiEEZ;and• Securing Kiribati’s rights under the UnitedNations Convention on The Law of the Sea (UNCLOS) to an area

beyond national jurisdiction located in the Clarion Clipperton Fracture Zone (CCFZ), situated in internationalwaters,isalsoknownas‘TheArea”,withworknowunderwaytoinitiateexploration.

4 IthasnotyetbeenconfirmedthatseafloormassivesulphitehasbeenfoundinKiribatiwaters

54 55TPF 2017-2027 TPF 2017-2027

Whilethereispotentialtodeveloptheseabedmining(SBM)industry,variouschallengestothedevelopmentofthesector in Kiribati include:

• Proper administration of the emerging industry and maintaining a transparent approach while balancing access todataandinformationwithprotectingtherightsofinvestors;

• Sustainableenvironmentalmanagement;• Minimisationofsocialimpacts;• Offeringinternationallycompetitiveinvestmentandfiscalconditionstoattractinvestors,whilesafeguardingSBM

revenuesforthenation;• Sound revenue management practices and other social measures, that will benefit current and future

generations;• MaintainingasoundregulatoryframeworkintheEEZandCCFZ;and• MaximisingbenefitsofKiribatiSBMresources.

Government recognises the potential contribution of seabed minerals towards the generation of revenue and sustainable development. To support the development of the sector, a comprehensive SeabedMinerals Policyhasbeendeveloped.TheGovernmenthasalsoenactedtheSeabedMineralsActforeffectivemanagementofthesector. The key objectives of the policy include:

• To strengthen regulatory and institutional frameworks to ensure that the DSM activities undertaken under Kiribati’seffectivecontrolcomplywithrelevantinternationalconventionsandstandards;

• IthasnotyetbeenconfirmedthatseafloormassivesulphitehasbeenfoundinKiribatiwaters• Toprovideaconduciveinvestmentclimate,fiscalregimeandregulatoryframeworkthatencouragesresponsible

investment in the country for the development of DSM activities in Kiribati without compromising the existing frameworks;

• To maximise trade and economic benefits through sustainable DSM activities that will generate additionaleconomicopportunitiesforKiribatibywayofcreatingemploymentandincomeforthepeopleofKiribati;

• ToensureequitablesharingofbenefitsfromDSMactivities, includingfair,equitableandeffectivedistributionofbenefitsfromroyaltiesandtaxes,employment,trainingandskillsdevelopment,maximumlocalcontentandtechnology,andknowledgetransfer;and

• To protect Kiribati’s coastal and marine environment and other legitimate sea user (including customary and subsistence use, commercial fisheries, coastal and marine tourism as well as maritime transport andcommunications) from the potential impacts of DSM activities.

Policy Measures

Inordertoachievetheaboveobjectives,theGovernmentwill:

• Implement the Seabed Minerals Policy and legislative framework with the view of maximising revenue from the sector;and

• Explore and exploit its stake in the Clarion Clipperton Fracture Zone while maximising opportunities for capacity buildingandaccesstobenefitsharingfromtheArea.

7.6 Strengthening Domestic Supply Chains

Domestictradecanmakeasignificantcontributiontosustainableeconomicdevelopment.Anefficientfunctioningdomesticmarketwiththeactiveparticipationofwomen,men,thedisabledandyouthisessentialforthewelfareofthepopulation,asitwouldprovideemploymentandincomeforI-Kiribati.Acompetitivemarketingsystemwillensureefficientproductionandsupplyofdomesticproduce,especiallyfromtheouterislandswheredomestictradeis still fragmented.

Kiribati handicrafts

While the Government has implemented tangible initiatives to stimulate the evolution of the private sector through the implementation of initiatives like the freight levy subsidy, linking producers tomarkets remains amajorconstrainttothedevelopmentofthesupplychain.Theconstrainttothedomesticsupplychainishowever,attributed to limited inter-islandconnectivity,poormarketing infrastructurewhereproducerscanstoreandselltheirgoods,inadequateskillsamongstprivatesectorgroupsonsupplychainmanagementandagenerallackofawareness amongst producers on the opportunities available within the domestic market for programmes put in place by Government to assist them. There is also a lack of awareness on how to make use of new technologies such as ICTs to facilitate domestic trade by improving buyers and sellers connectivity along the supply chain.

Policy Measures

Inordertostrengthentheparticipationofproducersinthedomesticsupplychain,theGovernmentwill:

• Establishanopenintegratedmarketforlocalproducetoenhancedomestictrade;• Supportinvestmentinfruitprocessingandstoragefacilitieslikefishcentresoricemakingmachinestoreduce

post-harvestlosses;• Strengthenthecapacityofbusinessassociations,cooperativesandtheirnetworksonproduction,supplychain

managementandmarketingtoenhanceproducermarketlinkages;• Implement awareness programmes to encourage producers to take advantage of existing Government-

establishedincentivestopromotedomestictrade;and• Implementpolicymeasurestoimproveinter-islandtransportandICTconnectivity.

56 57TPF 2017-2027 TPF 2017-2027

8. Implementation, Institutions and Aid for Trade8.1 Timeframe for Implementation

This Trade Policy Framework (TPF) will be implemented over a ten year period from December 2017 to December 2027.Thepolicywillhaveamid-termreviewin2022tomonitorprogressandmakepossibleadjustmentsinthestrategies to ensure the set objectives and goals are achieved during the implementation period.

The TPF will be implemented in line with the KV20, national development plans, as well as other Governmentinitiatives and programmes. The Government will also ensure that programmes supported by development partners are well aligned with the TPF to ensure coherence with the objectives and overall vision.

8.2 Implementation of the Trade Policy Framework at the Broad Level

Implementationof the trade-relatedpolicieshighlighted in the TPFwill first and foremost takeplacewithin thecontextoftherespectivepolicystatementsanddirectionsofthevariousMinistriesandDivisionsinvolved,andthewiderangeofstrategies,actionplansandworkplansthattheyoversee.

Long-termpolicyisoutlinedinvariouspolicydocuments.ThisTPFislinkedtothesekeypolicydocumentswherethey exist, aswell as highlightedwhere a formalisedGovernment policy does not exist. The keymedium-termtoolsare the four-yearMinisterial andDivisionalWorkPlans,whicharebudgetedaccording toKiribati’snormalMinisterialbudgetprocesses,withestablishedlinesofaccountabilityandmonitoring.

In addition, for an increasing number of cross-cutting issues that involve several ministries, work plans arecomplemented by dedicated Government strategies or action plans where a lead agency coordinates closely with otheragenciestoadvanceabroad,cross-cuttingpolicyagenda.OneexampleofthisistheNationalLabourMobilityPolicy (ledbyMEHR,but involvingnumerousothers).Privatesectordevelopmentandtradefacilitationareclearareaswhereacross-cuttingapproachisrequired.Fortradeissues,anumberofsuchstrategydocumentsalreadyexist,includingtheDiagnosticTradeIntegrationStudy(DTIS)ActionPlan,theEnhancedIntegratedFramework(EIF)workplan,theNationalQualityPolicy(NQP)andtheNationalIntellectualPropertyStrategy(NIPS).

KV20 Development Partners Forum, Tarawa

58 59TPF 2017-2027 TPF 2017-2027

ThekeytoaneffectivetradepolicyistoensurethattradeconcernsareproperlymainstreamedwithinalltheworkofrelevantMinistriesandAgenciesacrossGovernmentandbilateralaiddiscussions.Thetrademainstreamingeffortswill ensure greater policy coherence across the Government and whole of Government approach. Mainstreaming can be achieved in three main ways:

• Mainstreamtradeintobroaderdevelopmentstrategiesandsectorplans;• ActiveparticipationbyMCICandothertradestakeholdersinrelevantworkinggroupsontrade-relevantissues,

to ensure that sector policies are aligned to broad trade policy goals outlined in the TPF. Active communication is another way to ensure the mainstreaming of the trade policy across the Government and with the broader public;and

• AcoherenteffortontheimplementationofTPFrecommendations,withamonitoringtoolintheformofaTPFImplementationMatrixandaspecific tradepolicycoordinationmechanism in the formof theNationalTradeAdvisory Committee (see next sections).

8.3 TPF Implementation Matrix

Implementation of individual TPF recommendations will depend in large part on the actions of responsible Ministries andAgencies.However,acoherentapproachtotradewillrequireacentralisedandcoordinatedefforttowardsitsimplementation.Assuch,adetailedImplementationMatrixhasbeendevelopedtoaccompanytheTPF,presentingall of its recommendations in a single document and as such facilitating the coordination and monitoring of all of Kiribati’strade-relatedpolicygoalsinoneplace.

The TPF Implementation Matrix (Annex 1) contains the following information:• Policyareaandmeasurement;• Atimeframe(whereshort-termmeanswithinthreeyears,medium-termmeanswithinsixyearsandlong-term

meansbeyondsixyearsandupto10years);• Performanceindicators;• Theleadagency;and• Potential source of funding.

In order to ensure that the tradepolicy is coherent and consistentwithotherpolicies, the responsibility of theTPF implementationwill restwiththeGovernment lineMinistrieswiththemandatewhereeachpolicy falls,andthe monitoring of progress and consistency with the TPF will be the responsibility of the National Trade Advisory Committee (NTAC) incollaborationwiththeMCIC. In thisway, theTPFavoidscreatingduplicationofworkwhileensuring coherence of the policy framework. The underlying principle is to mainstream trade policy objectives across Kiribati’s policies.

8.4 Institutional Framework for Coordinating and Monitoring Implementation

Kiribati has already established a National Trade Advisory Committee (NTAC) to play a coordinating role across Governmentfortrade-relatedpolicies.ThecoremembersoftheNTACaredrawnfromkeylineMinistriesandtrade-related Organisations. The main roles of the NTAC include:

• Ensurepolicycoherence inthevarioustradearrangements,bothatmultilateralandregional levelsaswellasdomestictradeissues;

• Assist in mainstreaming trade into national development goals and ensuring proper implementation of trade policyobjectiveswithintherelevantministriesandbodies;

• Provide strategic policy advice to the Government in relation to capacity-building needs and appropriateinstitutionalframeworktohandlethecountry’sregionalintegrationagenda;

• Reviewandendorsetheoveralldevelopment-orientedtradenegotiationstrategyandnationalpositions;• Facilitatetheformulationandimplementationofthecountry’sTradePolicyFramework,Trade• DevelopmentandExportStrategies;• Identifyandcommissiontrade-relatedsectorstudies;

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• Coordinateandreviewtheimplementationofresultingtradeagreements;• Reviewtheimplementationofdifferentagreementstowhichthecountryisaparty,monitoringandevaluating

theimpactoftheresultsoftheagreementstothecountry;• Recommendstrategiestowardseffectiveexploitationoftradeopportunitiesatnationalandregionallevel;• Monitorandcoordinatetheimplementationofdonor-fundedtrade-relatedprojects;• DevelopandrecommendanationaljointstrategytowardsmobilisationofAidforTrade(AfT)funds;• Recommendformationoftechnicalsub-committeeswherenecessary;and• Recommend and endorse Cabinet Information and Memorandum Papers on trade matters.

The Secretary of Commerce, Industry and Cooperatives is the Chair of the NTAC, with the Trade PromotionDivision as the NTAC secretariat. The NTAC is conducted monthly. Given its existing role in the coordination and implementationoftheTPF,theNTACwillregularlymonitorandevaluatethepolicyimplementation.

BeyondthemainNTAC,anumberofsubcommitteesandtechnicalworkinggroupsalreadyexist:•IntellectualPropertysub-committee•Tradefacilitationsub-committee• Decent work steering committee• Tourism sector working group•QualityCoordinationsub-committee

TheTPFimplementationwillensurethatallsubcommitteesandconsultativemechanismsinvolveallstakeholders,includingalloftherelevanttechnicalministries,theprivatesectorandCivilSocietyOrganisations(CSOs).

Figure 8.1 Institutional Structure for Implementation of the TPF

8.5 Resourcing TPF Implementation through Aid for Trade

InadditiontoGovernment’sownbudgetaryresources,securingdonorfundingavailableundertheAidforTrade(AfT) initiative will provide an important additional resource for Kiribati to implement the policy goals outlined in theTPF.AidforTrade(AfT)isasub-classificationofoverseasdevelopmentassistance(ODA),coveringarangeoftrade-relateddonorinterventionsfallingunderfourbroadcategories:tradepolicyregulations,buildingproductivecapacity,economicinfrastructureandtrade-relatedadjustment.AfTprojectsrangefromlarge-scaleinfrastructure,toassistancefortradefacilitation(suchasincustomsandquarantine),tosectorssuchasagriculture,fisheriesandtourism. It also covers trade policy formulation and implementation.

60 61TPF 2017-2027 TPF 2017-2027

Table 8.1 AfT Activity by Donor (2011-15, total)

Source: OECD Creditor Reporting System, USD$m current

Table8.1showsthat,accordingtoAfTFiguresthathavebeenreportedandpublishedbytheOECD,aroundUSD144minAfTwasdeliveredtoKiribatibetween2011and2015.KeyAfTdonorsincludedJapan,theWorldBank,NZ,Australia,regionaldevelopmentbanksincludingADBandEUinstitutions.Allocationsareinfluencedheavilybycontributionstoinfrastructuredevelopment, includingtransport,communicationsandenergy.Othersectorsreceivingsupporthaveincludedthefisheriessector,thebusinessenvironment,agricultureandminerals.Goingforward,donorsareincreasinglyprioritisingAfTintheirassistanceprogrammes,includingareasbeyondinfrastructure.OpportunitiesthereforeexistforKiribatitorequestspecificprogrammestoimplementTPFrecommendations.

A key AfT project in support of trade policy implementation has been the Enhanced Integrated Framework (EIF) for LeastDevelopedCountries(LDCs),amulti-donorprogrammeinvolvingUNDP,InternationalTradeCentre,UNCTAD,WorldBank,WTOandtheIMF.KiribatihasalreadybenefitedundertheEIFfromsupportunderits‘Tier1’windowforsupportinmainstreamingtradeintonationaldevelopmentplans,strengtheningtradeinstitutionsandbuildingcapacity. It iscurrently intheprocessofdevelopingproposalstoaccess ‘Tier2’ fundstofinanceprioritycatalystprojectstoovercomesupply-sideconstraintstotradeandhelpdevelopsustainableexportgrowth.

AsidefromtheEIF,KiribatihasalsobenefitedfromtheCommonwealthSecretariat‘sHubandSpokesProgrammethrough the deployment of the National Trade Advisor to support trade capacity building and policy implementation.

AswithODAmoregenerally,itisimportantfordevelopmentsupporttoensurecountryownershipandpolicyspace.DonorsupporttoKiribatishouldbetailoredinlinewithnationalpriorities,andresourcesusedefficientlyinlinewiththeinternationallyagreedbestpracticeprinciplesintheareaofaideffectivenessasoutlinedintheParisDeclarationand Accra Agenda for Action.

AfT Sector Aus Japan New Zealand

EU Inst’ns

Reg’l Devt Banks

UN World Bank Other Total

Transport & Storage 8.5 34.4 29.3 0.0 9.1 0.0 27.7 0.4 109.4

Communications 5.5 0.3 1.1 0.0 0.0 0.0 0.7 0.0 7.6

Energy 0.0 0.0 0.5 4.4 0.0 0.0 0.0 5.3 10.2

Banking & Finance 0.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.4

Business & Other 0.5 0.0 0.0 0.0 0.0 0.0 2.8 0.0 3.3

Agriculture 1.6 0.2 0.0 0.0 0.0 0.0 0.0 0.1 1.8

Forestry 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.1

Fishing 1.9 3.2 1.3 0.0 0.0 0.0 2.0 1.0 9.4

Industry 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.1

Mineral Resources 0.0 0.0 0.0 1.2 0.0 0.0 0.0 0.0 1.2

Trade Policy & Reg’s 0.5 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.6

Tourism 0.0 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.2

Total 18.9 38.4 32.3 5.6 9.1 0.2 33.2 6.8 144.4

Share 13.1% 26.6% 22.4% 3.9% 6.3% 0.1% 23.0% 4.7% 100 %

Policy Measures

In order to improve the institutional arrangements and maximise Aid for Trade resources for effectiveimplementationoftheTradePolicyFramework,theGovernmentwill:

• Strengthen existing multi-stakeholder consultative mechanisms to ensure that trade concerns are properlymainstreamedbyGovernmentforgoodtradedevelopmentoutcomes;

• ExploreandconsiderestablishmentofaTradeActtosupportsustainabilityofkeyinstitutionssuchasNTAC,etc;• EnhancethecapacityofrelevantstakeholdersonthedevelopmentoftechnicalAfTproposals;• Strengthen collaboration and partnerships with international organisations and development partners to

maximisethebenefitsofAfTopportunities;and• Mainstream Aid for Trade in the Bilateral donor partnership arrangements and in the Development partner’s

forums and dialogues.

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