The International Trade Commission released Oct. 30 a report on U.S. trade and investment with 22 Pacific islands: American Samoa, Cook Islands, Fiji, French Polynesia, Guam, Kiribati, Marshall Islands, Micronesia, Nauru, New Caledonia, Niue, Northern Mariana Islands, Palau, Papua New Guinea, Pitcairn Islands, Samoa, Solomon Islands, Tokelau, Tonga, Tuvalu, Vanuatu, and Wallis and Futuna.
According to the ITC, Pacific island economies collectively export mostly extractive commodities like natural gas, minerals, and metals to the world but export mostly fishery and agriculture products like tuna, water, coffee, and cocoa beans to the U.S. Most of the limited U.S. investment in the region is concentrated in Fiji and Papua New Guinea and mainly in tourism and extractive sectors, respectively.
The report identifies seven goods sectors and two services sectors as having potential for increased exports to the U.S.: fish, nickel, spices, virgin coconut oil, cocoa, kava, coffee, tourism, and business process outsourcing. In many of these sectors Pacific island economies are developing strategies to add more value to their products and services, or to differentiate them, to compete with larger sources of supply outside the region.
However, the Pacific islands face a number of impediments to their efforts to expand trade and investment. For example, their small geographic and economic size, plus large distances between both the islands and external markets, often result in a lack of economies of scale, high fixed costs for production, limited institutional capacity, and limited economic diversification. The region also faces impacts from climate change and natural disasters that can deter investment and disrupt production in economic sectors that demonstrate potential for development and export growth.
The U.S. has a number of options for helping the Pacific islands overcome these challenges, the report states. One is to update preferential market access programs like the Generalized System of Preferences. While regional countries designated as GSP beneficiaries had a relatively low level of trade of GSP-eligible products during 2017-2021, the report notes, they had a high GSP utilization rate (the percentage of GSP-eligible products claiming GSP benefits upon entry to the U.S.). The characteristics of, and factors determining, Pacific island use and utilization of GSP are included in the report.
Other suggestions for U.S. assistance to the region include helping exporters navigate and comply with U.S. market access requirements and supporting implementation of the WTO Agreement on Fisheries Subsidies.
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