Summary of WTO commitments and Vanuatu’s accession package
At the Eighth WTO Ministerial Conference in December 2011, trade ministers decided to “further strengthen, streamline, and operationalise the 2002 LDC accession guidelines,” with the inclusion of benchmarks on goods and services, as well as elements on special and differential treatment, transition periods, transparency, and technical assistance. In Vanuatu’s 2012 accession package, Vanuatu committed to:
Not carry out pre-shipment inspection of imports with no plans to do so;
Not apply any anti-dumping, countervailing or safeguard measures until it had implemented appropriate laws consistent with WTO agreements;
Having no intention of being part of the Government Procurement Agreement;
Submit all notifications required by any agreement;
Apply an average final bound rate of 39.7% (43.6% for agricultural products and 39.1% for industrial products) and binding all of its tariffs;
Having no export subsidies applied to agricultural products from 2013 to 2019;
Applying import duty exemptions for goods imported for agriculture, horticulture, livestock and forestry. These include plant machinery, materials, equipment, spare parts and accessories. In addition to this, agricultural incentives are offered to agricultural producers and aid-financed programmes of domestic support for agriculture within the de minimis ceiling of 10 per cent, given Vanuatu’s LDC status;
Undertake specific commitments on 10 service sectors and 72 sub-sectors; and
Vanuatu is progressively liberalising its business environment with few restrictions on investment to promote small local businesses.
Total food import volumes
Data on the total volume of food imports into Vanuatu were collected from the 32 major WTO trading partners. The data include volumes of animal products, vegetable products, prepared foodstuffs, miscellaneous food preparations, non-alcoholic beverages, and animal or vegetable oils and fats (HS 01-2501). These food categories excluded variations of products used for pharmaceuticals, animal feeds, live animals, and flower cuttings and seeds not listed as edible. As Figure 1 shows, there were high and increasing levels of food import volumes from these WTO member countries between 2008 and 2019, a slight decline in 2009, 2012 and 2014, and a sharp increase from 2015 to 2018. In 2019, there was a sharp decline. In terms of trade with MSGTA member countries, the total volume of food imports shown in Figure 2 is from three MSGTA member countries: Fiji, Solomon Islands and Papua New Guinea. The total volume import trends for the years 2008 to 2019 was varied, with increases in 2010, 2011, 2013 to 2015 and again in 2017 and 2018; a slight decline in 2009 and 2012; and a sharp decline in 2019.
Less healthy food categories import volumes
Figures 3, 4, 5, 6, 7 and 8 illustrate the changes in import volumes for the various ‘less healthy’ food categories from 2008 to 2019. Figure 3 shows a marked increase in fatty and other selected meat products, sugar, savoury ready-to-eat snacks and energy-dense beverages between 2016 and 2018.
Acceding LDCs are required to bind all agricultural tariff lines at an overall average rate of 50 per cent and,in line with the WTO agreement on agriculture, all members are required to bind all agricultural tariff lines.On accession to WTO in 2012, Vanuatu bound all its agricultural tariff lines (including food products) at anoverall average rate of 43.6%. For non-agricultural products, the WTO decision provides two options:acceding LDCs shall bind 95% of their NAMA (non-agricultural market access) lines at an overall average rate of35%, or they can undertake more comprehensive binding coverage. Vanuatu agreed to a 100% binding coverageof its NAMA tariff lines at an overall average rate of 39.1%. This decision to apply benchmark ad valorem rates toagricultural and NAMA tariff lines does not, however, prevent LDCs like Vanuatu from negotiating higher ratesfor sensitive lines, as it does not impose any tariff cap. For instance, Table 2 (see Additional file 1) shows that bound tariffrates for chicken, ice-cream and edible ices, cordials/juices, soft drinks and electrolyte drinks/sports drinks allhave tariff peaks that exceed the benchmark. Table 2 also details the variations in tariff rates applied to selectedless healthy foods (shown in Figure 3). Tariff rates for these foods remained the same, except for peanut butter,which had a 10% decrease in 2012 and then a 10% increase from 2017; fruit based/flavoured yoghurt, which hada 15% decrease from 2012; and margarine, which had a 10% decrease and tariff reduced to zero from 2017. Tariffrates for these categories are relatively low, compared to the rates for selected ‘healthy’ focus foods shown inTable 3 (see Additional file 2).
As part of its WTO obligation, Vanuatu grants MFN (most favoured nation) tariff treatment to all its trading partners.There appears to be sufficient policy space for protecting domestic sectors. Vanuatu also applies preferentialtariffs to parties of the MSGTA, The Pacific Island CountriesTrade Agreement (PICTA) and, upon ratification, the Pacific Agreement on Closer Economic Relations Plus (PACERPlus). In addition to these, there are two charges affecting food imports, as well as domestic products: VAT andexcise duty. VAT of 15% applies to all goods and services unless they are exempt or zero-rated. Imports are VATexempt if they are valued at VUV 10,000 or less. Until 2017, the VAT rate had been 12.5% but this was increasedto support fiscal consolidation. An excise duty applies to items such as alcohol and tobacco products and it isnow also applied to sugar-sweetened beverages. In 2015, a specific excise tax was applied to both imported andlocally produced sweetened beverages (HS 2022). The tax rate is 50 vt/L, but for imported sweetened beverageproducts, there is an additional 75% tariff applied (see Table 2 in Additional File 1).
Tariff rates for ice-cream and edible ices, savoury ready-to-eat snacks (crisps and snacks, noodles) and sweet snacks (bakery products – sweet biscuits, confectionary) remained the same from 2008 to 2019 (see Table 2 in Additional File 1). Despite this, there have been increases in the import of ice cream and edible ices (See Figure 4), while the import of bakery products and confectionary increased from 2009 to 2011 and there was a sharp increase in the import of crisps and snacks and noodles from 2016 to 2018 (see Figure 5).
As shown in Figure 6, from 2008 to 2019, Vanuatu consistently imported more canned fish than processed meat and canned meat. With applied tariffs on processed meat and canned meat imports remaining unchanged between 2008 and 2019 (with the exception of a 10% increase in the tariffs on imported ham, bacon, salami, jerky, cold cuts and chicken nuggets from 2012 to 2019), there have been no marked increases. An additional excise duty of 20% (from 2014) and VAT of 15% (from 2017) applies to these food categories.
Figure 7 shows an increase in soft drink and cordial imports from 2016 to 2018, despite a high applied tariff of 75% on soft drinks and the applied tariff on cordial imports remaining unchanged from 2008 to 2019 at 20% per cent. The 75% per cent tariff applied to soft drinks and electrolyte/sports drinks is in addition to the specific excise tax rate of 50 vt/L applied since 2015 as alluded to earlier.
Sugar and caloric sweetener imports (HS 1701 and 1702) into Vanuatu over the period 2008 to 2019 was varied (see Figure 8). While the applied tariff on sugar and caloric sweetener imports remained unchanged at 10% from 2008 to 2019, an additional excise duty of 20% (From 2014) and VAT of 15% (From 2017) applies to these HS category codes.
Trade in services and foreign direct investment
Following its accession to WTO in 2012, Vanuatu agreed to undertake specific commitments
on 10 service sectors and to progressively liberalise its business environment, with few restrictions on investment in order to promote small local businesses. In accordance with the GATT Article III on national treatment, and paragraphs 1 to 3 in Article XVII of GATS, Vanuatu has applied no limitations on market access and no limitations on national treatment for foreign investors. Only normal government approval and registration is required for all foreign investors under Vanuatu’s Foreign Investment Act No.15 of 1998 and its amendments.
Type and country of origin of foreign-owned industries operating in Vanuatu
Table 4 (see Additional file 3) shows foreign-owned transnational corporations engaged in food and beverage production in Vanuatu from 1998 to 2019. While there are no available FDI (foreign direct investment) data specific to their investment in domestic food production, processing, retail and advertising sectors, the available data show that there were 49 foreign-owned companies engaged in food production, processing, wholesale and retail in Vanuatu
in 2019 (see Additional file 3). These companies are mainly associated with food manufacturing and processing and the production of coffee, bakery products, confectionary, food preservatives, fish, local food products and meat, as well as the manufacturing, processing and packaging of palm oil, coconut oil, cooking oil, water, cordial juice, flavoured juices, soft drinks and alcoholic beverages. The production of these is largely for local consumption. As
indicated in Table 4 (see Additional file 3), there are several breweries/distilleries, bakeries, cafes, restaurants and takeaway services with significant investment that are also operating in-country.
Type and country of domestic industries in the food and beverage sector in Vanuatu
Vanuatu’s domestic food and beverage industries also play an important role in shaping Vanuatu’s food environment. Data provided by the Ministry of Industry and Trade show 32 locally owned food and beverage companies registered since 2014 (see Table 5 in Additional file 4). Of the 32, five sell confectionary, ice cream and frozen dessert products; one is engaged in the production of peanut oil; one sells flavoured juices/soft drinks; five are breweries/distilleries/liquor businesses; three sell bakery products and ready meals; one sells sweet savoury snacks; and nine sell meats, of which one specifically sells canned meats only and eight sell fresh and processed meats. The remaining seven companies are engaged in other business ventures, producing and selling water (2), fruit juices and frozen fruit delights (1), coffee (1), frozen root crops (1), dried spices, fruits and vegetables (1), and manioc flour (1).