By Pesi Fonua

For Tonga to move forward and address its growing trade imbalance and unemployment, the Chief Executive Officer for its Ministry for Trade and Economic Development, Edgar Cocker, is convinced that Tonga should ratify PACERPlus, a Development and Trade Agreement between Australia and New Zealand and some Pacific Islands countries, then embark on an industrialisation program.

In an interview with Matangi Tonga Edgar expressed his grave concern over the depressing state that Tonga’s international trade is in.

The latest annual trade figures, released by the Office of the Auditor General showed that Tonga’s Total Imports for 2017 amounted to $523.976 million pa'anga, while our total exporta amounted to only $41.671 million.

Tonga’s biggest import is fuel, chewing up 75% of import expenditure.

Around 65% of our imported fuel is diesel  fuel, used mainly by national electricity generators and heavy construction vehicles and equipment. Despite the fact that we have a number of solar farms, so far have no visible impact on Tonga’s fuel imports while consumption rises.

Edgar believed that a sensible option to cut down on fuel imports is to cut down on the number of imported vehicles, since most of them are powered by benzene. He said he had proposed to the Prime Minister and Cabinet to cut down on the importation of motor vehicles but there had been no response.

Co-operatives

Edgar, has made some moves through the Ministry, he believes will  counter Tonga’s trade imbalance.

He has formed co-operative societies, and so far there are four operating at Kolonga, Veitongo, Masilamea and ‘Ahau.

He had also established a Trust Fund and through these societies, they are buying ‘ufi, and talo (yams and taro) at a price, higher than what the private exporters are offering.

Edgar favoured working with co-operative societies because, “money goes straight to the people, and it will encourage them to grow more.”

However, there are critics of his co-operative societies manoeuvre, but he pointed out that the economic success of the People’s Republic of China is based on the fact that the driving force behind their production line is co-operative societies.

Edgar said that through the co-operatives they exported coconut from the Niuas, and talo from ‘Eua. 

“We are currently exporting a container of root crops a month, and we are also selling fertilizer to our co-operative members, cheaper than what they buy from the retailers.”

Edgar said that they are looking at exporting kava and kape from Vava’u and at the moment in the process of building a packing shed at Hala Tupoulahi.

He was convinced that Tonga has to be industrialized, “meaning that we have to focus on manufacturing, product diversification and economic diversification.”

With product diversification he explained that we have to build factories and use our raw materials to produce products for export, and with economic diversification, we have to explore opportunities in sports, special skills and technologies.

PACERPlus

After the PACERPlus Development and Trade Agreement was signed in Nuku’alofa on 14 June 2017 by Australia, Cook Islands, Kiribati, Nauru, New Zealand, Niue, Samoa, Solomon Islands, Tonga, Tuvalu, Vanuatu; the ratification was scheduled for 2019.

On the sidelines during the signing of the PACERPlus in Nuku’alofa, the Pacific Island countries also signed a Labour Mobility Arrangement with Australia and New Zealand. Annual foreign remittances to Tonga under this labour mobility scheme have been reported to be more than Tongan exports.

A number of Pacific Islands countries have not signed the agreement, including Fiji and Papua New Guinea, the two with the biggest economies in the Pacific. The question then is, will Tonga go ahead and ratify PACERPlus this year.

According to Sione Sisifa, the Director General at the Office of the Attorney General, there was still a lot of work to be carried out,  including research and public consultations before they could submit the PACERPlus Development and Trade Agreement to the King in Privy Council. “There may be even questions that we have to find answers for.”

Rules of Origin

Meanwhile, Edgar has just returned from a workshop, “Preparing for PACERPlus benefits”. 

The workshop focused on Flexible Rules of Origin, designated to be adopted under PACER Plus.

Edgar explained that under the Flexible Rules of Origin, a factory in Tonga could import some raw materials from overseas for the manufacturing of export products here, and under this we can label the finished products as being Made in Tonga.

Edgar is sincerely convinced that if Tonga will make it known that we want to ratify PACERPlus next week, “we will be given $7 million to get ready.

To move forward with his Industrialisation Program, Edgar became affiliated with a World Trade Organization, WTO Aid for Trade initiative to help developing countries, particularly the least developed to build their trade capacity and infrastructure. It is part of the WTO overall Official Development Assistance, grants and concessional loans, targeted at trade-related programs and projects.

He planned to attend a three days Global Review of Aid for Trade on “Supporting Economic Diversification and Empowerment for Inclusive, Sustainable Development Through Aid for Trade” in Geneva in July.

Aid for Trade is a WTO initiative that is funded by donor countries and New Zealand is reported to have contributed NZD$740 million for the first five years of implementation of PACERPlus.

But at the moment, PACERPlus or no PACERPlus, the difficult problem of how Tonga is going to balance its enormous trade imbalance remains unresolved.