MTEC, Framework for Pacific Regionalism, and MTEC Trade and Investment Facilitation Initiative
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1 MTEC, Framework for Pacific Regionalism, and MTEC Trade and Investment Facilitation Initiative Interim Secretariat August 2015
2 Objectives Enhance understanding on the MTEC and how it fits within the Framework for Pacific Regionalism Provide an overview of the MTEC Trade and Investment Facilitation Initiative and how it relates to the current regional trade facilitation agenda
3 Outline Context and background of the MTEC MTEC, element of the Framework for Pacific Regionalism and stepping stone towards greater integration of the Pacific region MTEC Trade and Investment Facilitation Initiative
4 Context and background
5 Context and Background (cont d) The Micronesian Sub-region Five Small Island Developing States (SIDS): Federated States of Micronesia (FSM), Republic of Kiribati, Republic of Nauru, Republic of the Marshall Islands (RMI), and Republic of Palau (Palau). Two Territories: Commonwealth of Northern Marianas Islands (CNMI) and Guam. Estimated total population: 505,290 / Total land mass: 3400 km 2 Total EEZ: about 11 million km 2 (excluding CNMI and Guam)
6 Context and background (cont d) Five vulnerable and net import economies Total GDP: approximately US$1.04 billion (excluding CNMI and Guam) High and increasing trade in goods deficit (ranging from 38.9% of total GDP in the case of RMI to 50.1% in the case of the Palau) High dependence on external aid (average 45 to 60% of GDP).
7 Context and Background (cont d) A burgeoning private sector: concentrated in construction, banking, distribution, small scale tourism (with the exception of Palau), and production Productive sector almost inexistent and faces numerous supply side constraints due to isolation and remoteness from international markets and impact of climate change and natural disasters Limited exposure to international trade and inadequate institutions and infrastructure. Main sectors for potential economic growth: fisheries, niche agriculture produce, and trade in services, in particular tourism, insurance and financial services
8 Context and background (cont d) Several sub-regional initiatives co-exist in the Micronesian sub-region, including: Micronesian Shipping Commission Micronesian Centre for Sustainable Development Micronesian Association for Sustainable Aquaculture None is focused on trade and economic development Need for an umbrella institution
9 Context and background (cont d) From the MTC to the MTEC Treaty 7 th MPS, September 2007, Chuuk, FSM directed trade authorities to explore the possibility of establishing a Micronesian Trade Committee July 2008: MTC established through an MOU focuses primarily on policy coordination in trade negotiations with third countries
10 Context and Background (cont d) Why a Treaty? to establish a predictable Legal and institutional framework to enable the creation of economies of scale to attract sound investments, facilitate networking of producers to meet the demand and integrate the Global Value Chains, enhance the competitiveness of the domestic private sector by providing a learning ground. to reinforce Member States commitment to sub-regional trade and economic cooperation and integration and provide a stepping stone towards greater integration in the Pacific region and participation in international trade;
11 Context and background (cont d) to send a positive signal to Development Partners about Member States determination to pursue sustainable economic development through trade and investment promotion and development. to provide an institutional framework through which Development Partners trade, investment, and economic related programs would be facilitated, implemented and monitored within the Micronesian Sub-region, (investment business climate, SME development in particular in the area of sustainable fisheries, tourism and agriculture, trade supportive infrastructure).
12 Context and background (cont d) Pre-negotiations and drafting of First Draft 2012: Mandate from the 12 th MPS 2013: Pre-consultations and drafting of the first Draft January-March 2014: National consultations Negotiations of the Treaty June 30-July 1, 2014 : Working Group Meeting, Koror, Palau, Revised Draft July 16, 2014: 6 th MTC Ministers Meeting, Review and adoption of the Revised Draft
13 Context and background (cont d) Negotiations of the Treaty (cont d) July 17-18, 2014: 14 th Micronesian Presidents Summit reaffirmed their vision and longterm goals and Directed the finalization of the Treaty for signing before the end of Conclusion and signing of the Treaty August 07-25, 2014: final comments and legal scrubbing of the final Draft September 1, 2014: Special MTC Ministers Meeting, conclusion of the Treaty September 3, 2014: signing
14 Context and background (cont d) September 3, 2014, Signing of the MTEC Treaty
15 Context and background (cont d) Cooperation and integration Rule of law, good governance, human rights, and democracy Article 3: Vision, goal, and principles Creation of a Micronesian Trade and Economic Community through the promotion of sub-regional trade and economic cooperation and integration Solidarity and collective self-reliance Equitable and just distribution of the costs and benefits of sub-regional cooperation and integration
16 Context and background (cont d) Article 5: Priority areas of cooperation/multi-phased approach Phase 2: free trade and investment Phase 1: setting rules, institutions, and infrastructure for preferential trade and investment Phase 3: harmonization of trade and investment policies Phase 4: realization of a common market
17 MTEC: stepping stone towards Pacific regionalism Preamble of the MTEC Treaty Desiring to increase and enhance their participation in regional cooperation and integration initiatives as envisaged in the New Framework for Pacific Regionalism, the Bangkok Declaration on Regional Economic Cooperation and Integration in Asia and the Pacific, and the vision for the formation of an economic community of Asia and the Pacific, as well as enhance their involvement in broader international trade and economy
18 MTEC: stepping stone towards Pacific regionalism Article 4: Objectives Strengthening and consolidation of links among the people of the sub-region; Enhancement of Member States trade capacities Expansion of trade and investment flows; Greater integration of the Member States into the global economy; and Maximization of trade development assistance flows into the sub-region
19 MTEC: stepping stone towards Pacific regionalism More integrated sub-regions Greater integrated Pacific region MTEC MSG Pacific region Tevaka Muana
20 MTEC Trade and Investment Facilitation Initiative Aims Enhance the trade and investment facilitation conditions and lower the trade costs MTEC Trade & Investment Facilitation Initiative Increase trade and investment flows Strengthen the competitiveness and sustainability of economic growth of member economies Strengthen subregional economic integration
21 Roadmap National consultations to confirm the findings of the preliminary assessment [Aug.-Nov. 2015] Validation by the National Trade Facilitation Committee [Aug.-Nov. 2015] Development of subregional categories [Nov.-Dec. 2015]. Development of implementation matrix and project proposals [Dec.2015-Jan. 2016]. Disseminate and sensitize Development Partners [Jan March. 2016]. Implementation of low-hanging fruits [March.2016-Dec. 2016]. Sustaining implementation of Category A measures Monitoring/evaluati on [July 2016] Publication and dissemination of early success stories [Nov.- Dec.2016] Implementation of Category B and C measures Publication and dissemination of success stories from the previous phase Sensitizing Development Partners on the MTEC trade and investment facilitation initiative.
22 MTEC and Pacific Regionalism: way forward Strengthen the MTEC as an element of the Framework for Pacific Regionalism with a view to speed up integration of MTEC Member States into the broader Pacific region Enhance collaboration with PIFS to implement the regional agenda on trade facilitation Pursue and intensify collaboration with MSG, current partners (Commonwealth Secretariat, ESCAP, ITC-UNCTAD) and other Bilateral and Multilateral Development Partners to implement the regional agenda of trade facilitation
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24 Thank you, Come visit us
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