Criticisms of Tonga's accession to WTO made by Oxfam last week, have been called "outrageous", "nasty" and "erroneous", by the Tongan delegation to Hong Kong, led by Tonga's Minister of Labour, Commerce and Industries Hon. Dr Fred Sevele, in a statement today.

Oxfam said that Tonga was about to make history by joining the World Trade Organisation (WTO) "on what are arguably the worst terms ever offered to any country".

The Tongan delegation in Hong Kong, who include the Minister along with Paulo Kautoke (Secretary for Labour, Commerce and Industries), and Jaya Choraria (Assistant Secretary, Trade Policy Unit of the Ministry of Labour, Commerce & Industries), made a six page press statement today saying that Oxfam's claim was "outrageously fase and nasty... based on emotional ignorance rather than on a true understanding of the realities of the Tongan situation."

The delegation said that the Tonga government had taken 10 years to consider and negotiate, "and it firmly believes that, on balance, Accession Now is the best course for the Kingdom. The economy has been a very open one for years. Joining the WTO is simply another step in its international journey. Much of what Tonga has committed to is in line with existing national policies."

Oxfam claimed that Tonga has given away far too much on tariffs in agreeing to bind its tariffs on imports at 15/20%.

But the Tongans say that this binding rate is in line with government policy of reducing import tariffs, "in order to reduce the costs of imports to make them affordable to the general public particularly the poorer sections of the community. The government of Tonga has been undertaking an economic reform programme over the past five years, and one of the primary aims of this economic reform is to reduce where possible the costs of living..., with emphasis on areas directly impacting on the poor and on investment, and to reduce the cost of doing business."

They said that at the moment much of Tonga...’s consumption, food and non-food items, is imported and the tariffs imposed on those imports are high relative to the income of most of the population who need to import basic foodstuffs such as milk and meat, because little is being produced locally.

Meanwhile, import tariffs on farm vehicles is 45%, plus other taxes raising the total to at least 60% to be added to the landed cost, which the farmer has to pay and, "is surely a disincentive to farmers, fishermen and other investors."

Cheating the system

"One of the unintended yet adverse effects of having relatively high import tariffs is the incentive it gives to customs officers and businesses to cheat the system. And Tonga is losing millions of dollars a year through customs/border scams of all kinds ...– false invoices, smuggling etc. Tonga recently recruited through Australian and New Zealand aid assistance the services of experienced Customs Officers from those two countries to deal with these problems," the statement said.

"Adopting a relatively low regime of import tariffs will undoubtedly lead to greater compliance, more revenue collected and a level playing field for all. In any event, nothing in WTO or in our terms of accession would prevent Tonga from raising revenue."

Parliament has over the years been pushing for reduction and even removal of tariffs on imported foodstuffs. Thus Tonga...’s commitments to WTO on lowering import tariffs reflected not only government policy but also the wishes of the people, they said..

"These are precisely what our reform policy of lowering tariffs is aiming at. It has not been viciously extracted of us by our WTO accession, as Oxfam claims. If anything, our accession has simply speeded up the process."

The statement also pointed out that Tonga had already opened up its health and education services for many years

"In any case, nothing in the GATS Agreement prevents Tonga, or any other WTO member, from regulating its services sectors."

The Tongan delegation believed that the "...WTO provisions would not supersede domestic legislation; they would have to be integrated into domestic legislation through amendments. In the event of a conflict between WTO provisions and domestic laws and regulations, the latter would apply."

"We emphasize that WTO membership does not take away Tonga...’s sovereign rights to regulate its own economy, and follow its own laws.

"This is clearly a reflection of Oxfam...’s lack of understanding of the history and the effects of the Industrial Development Incentives Act. This Act has been abused consistently, as been discriminatory in its application and has not delivered the desired effects. It has also resulted in huge losses of government revenue. This Act is to be repealed and replaced by simply offering relatively low tariffs on imports of capital equipment and plant.

"Articles VI and XIX of GATT provide for protection against injury to local industries through taking anti-dumping or safeguard measures. Given Tonga...’s particular situation and history of the development of its local industries, there is no room for undue anxiety in this connection.

"If Tonga wants to ensure that it will truly attract foreign investment, of which there has been very little to date, its commitments in this connection under its WTO membership will ensure that there is predictability and transparency in the trading and investing regime, giving foreign investors confidence." Tongan statement said.