The World Trade Organisation (WTO) is the global international body overseeing the rules of trade between countries. The WTO was formalised during the 1994 Uruguay Round of trade talks, when the General Agreement on Tariffs and Trade (GATT) was made a permanent institution. Solomon Islands has been a member of the WTO since 1996. As of July 2016, there are 164 Members of the WTO.
The WTO has three main functions:
Provides a forum for member countries to negotiate trade rules
Provides a mechanism for handling trade disputes, and
Monitors and reviews domestic trade policies of individual members.
The WTO is formed of a series of multilateral agreements, which set the rules for international trade in goods and services. The WTO Ministerial Conference is the highest decision-making body of the WTO. The most recent Ministerial Conference (MC10) was held in Nairobi, Kenya in December 2015 and marked the 20th anniversary of the WTO. Signalling the rapid rise of the continent, this was the first Ministerial Conference held in Africa.
At the end of the meeting, the Nairobi Package was adopted, comprised of a series of six Ministerial Decisions on agriculture, cotton and issues related to least-developed countries (LDCs). This included a historic agreement by WTO members to end all agricultural export subsidies.
The WTO also recognises the different stages of development countries face and as such, helps developing country members comply with WTO rules in order to realise the benefits of membership. The Doha Round of multilateral trade negotiations was launched in 2001. At MC10 there was no consensus to continue the Doha Round negotiations under the original mandate. Solomon Islands maintains its support for the Doha Round of negotiations stressing the need for additional support for LDCs and developing countries to help integrate into the global trading system.
Ministerial Conferences have previously been held in Singapore, Geneva (1998, 2009, and 2011), Seattle, Doha, Cancun, Hong Kong and Bali.
In 2012, Solomon Islands opened a permanent mission in Geneva with the intention of increasing its interest and participation in the multilateral trading system.
As part of its WTO membership, Solomon Islands has undertaken three Trade Policy Reviews and is in the process of notifying its commitments under the Trade Facilitation Agreement.
More information on the Trade Policy Review mechanism and the Trade Facilitation Agreement can be found in the links below. In addition, more information on Solomon Islands’ schedule of tariff commitments at the WTO is provided in the link below.
Trade Policy Review
As a member of the WTO, Solomon Islands is required to undertake a review of its trade policies and practices, under the WTO’s Trade Policy Review Mechanism. Each Member’s share in world trade determines the frequency of their review. The EU, United States, China and Japan are reviewed every two years, whilst the sixteen next largest Members are reviewed every four. All other Members, including Solomon Islands, are reviewed every six years. The first Trade Policy Review of Solomon Islands took place in 1998, the second in 2009 and the third in 2016.
The Trade Policy Review Mechanism was provisionally established at the Montreal Mid-Term Review of the Round in December 1988. In 1994, the mechanism became a basic function of the WTO, under Article III of the Marrakesh Agreement. The objective is to promote transparency in trade policy and ensure adherence to WTO rules, disciplines and commitments.
The reviews are not limited to trade policies only, but rather take into account the wider economic environment, as well as in the case of developing countries and LDCs, the developmental needs of the Member. It is important to note that the review mechanism is not intended to force Members to adhere to their WTO obligations or impose new trade policy commitments, but to provide current information to aid potential exporters looking to trade with Solomon Islands.
The review process includes:
a report prepared by the WTO Secretariat on the Member’s trade policies and practices
a report by the Member government
a written question and answer process, whereby the Member responds to questions from other Members regarding its trade policies and practices, and
a formal meeting in Geneva of the WTO Trade Policy Review Body.
All review documents are published on the WTO website following the WTO TPR body meeting. Links to the Trade Policy Reviews of Solomon Islands can be found under resources.
Trade Facilitation Agreement
The Trade Facilitation Agreement was concluded at the 9th Ministerial Conference in Bali, 2013 with the aim of addressing the red tape that traders in both developed and developing countries face in moving goods across borders. The Agreement comprises of 3 sections:
Section I contains the provisions for expediting the movement, release and clearance of goods, clarifies and improves the relevant GATT articles and sets provisions for customs cooperation.
Section II contains special and differential treatment (SDT) provisions which allow developing countries and LDCs to determine when they will implement individual provisions of the Agreement and identify those provisions which can only be implemented with technical assistance and support for capacity building. To benefit from this provision, each developing and LDC Member must categorise each provision according to the following list:
Category A – provisions that a Member will implement when the Agreement comes into force, or for LDCs, within one year following Agreement’s entry into force.
Category B – provisions that a Member will implement after a transitional period following the entry into force of the Agreement. This transitionary period is to be determined by the Member.
Category C – provisions that a Member will implement after the transitional period with technical assistance and support for capacity building.
Section III contains provisions that establish a permanent committee on trade facilitation at the WTO and requires Members to have a national committee to facilitate domestic coordination and implementation of the provisions of the Agreement.
The flexibilities provided to developing countries and LDCs include:
an early warning mechanism which allows Members to request an extension from the WTO Trade Facilitation Committee it if experiences difficulties implementing its Category B and C provisions by the date notified
an expert group will be established if a requested extension has not been granted and a Member country lacks capacity to implement, in order to examine the issue and make a recommendation.
the ability for members to shift provisions between Categories B and C, and
the non-subject of LDCs to Dispute Settlement Understanding for a period of 6 years for Category A provisions and for 8 years for Category B and C provisions.
The Agreement will enter into force once two thirds of Members have ratified, with LDCs being granted an additional year to notify provisions under Categories A, B and C. After two years, LDCs will have to notify technical assistance requirements for implementation of Category C provisions. Three years after entry into force, LDCs will have to notify definitive dates of implementation of provisions under Category B. Four years after entry into force, LDCs are required to inform Trade Facilitation Committee of arrangements with donors and indicative dates of implementation for Category C provisions. Five years after entry into force, LDCs are required to inform Trade Facilitation Committee on the progress in provision of assistance and notify definitive dates.
The requirements of support to assist Solomon Islands in its compliance with the Agreement are to be identified by relevant stakeholders in the economy and agreed to bilaterally with the WTO, WTO Member donor partners and other intergovernmental organisations.
The WTO has set up the Trade Facilitation Agreement Facility, at the request of developing countries and LDCs Members to help ensure that they receive the assistance they need in order to reap the full benefits of the Agreement. The Facility will help developing and LDC Members to assess their specific needs and identify possible development partners to help them meet those needs. More information can be found in the link below.
As stipulated in the Agreement, the Solomon Islands established the National Trade Facilitation Committee (NTFC), following endorsement by the National Trade Development Council’s endorsement, and its inaugural meeting was held in November 2015. The NTFC comprises of representatives from Biosecurity, Customs, Quarantine and Health, Solomon Islands Ports Authority, Department of External Trade, Solomon Islands Chambers of Commerce and Industry and Marketing and Export Promotion Division in Ministry of Commerce, Investment, Labour and Immigration.
For Solomon Islands, improving the facilitation of trade will lead to significant benefits, given the dependence on trade for economic growth. As a small island developing state with limited access to global markets, high transportation costs and significant resource and capacity constraints, the technical assistance which the government is set to receive to improve trade facilitation through the Agreement is fundamental to expanding our trading capacity. Combined with improvements in productive capacity and diversification of exports, measures to facilitate trade will lead to growth opportunities for the whole economy.
More information on the Agreement and the Solomon Islands’ schedule of commitments for Category A articles can be found under resources.
Trade Facilitation Agreement Facility
Protocol Amending Marrakesh Agreement Establishing WTO
Agreement on Trade Facilitation
Schedule of Commitments for Category A
WTO Tariff Schedule
The Solomon Islands’ schedule of tariff commitments on goods contains details of the import duties charged on goods entering Solomon Islands. Solomon Islands has undertaken obligations to not raise the level of its tariffs above these rates, as agreed to at the WTO. Solomon Islands, over the coming years, will be updating its HS schedule from 2012 to 2017.
Solomon Islands schedule of tariff commitments at WTO