Risky side of Solomon Islands’ graduation from LDC

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By Mike Puia

THE United Nations’ Committee for Development Policy (CDP) has announced that Solomon Islands is one of the four countries that will soon graduate out from the Least Developed Countries (LDCs) list.

This is history for the country since Solomon Islands is among five countries, out of 47, that graduated out of this status since the UN established the LDC category in 1971.

While the graduation is seen as a positive indication that there are improvements, senior local diplomats are worried about this.

Minister Counsellor and Chargé d’affaires at our Permanent Mission in Geneva, Switzerland, Barrett Salato, has expressed that while the country’s graduating out from LDC status may be seen as a positive achievement, it would also mean that Solomon Islands will no longer enjoy the special trade rules and development programmes and assistance given to LDCs.

Mr Salato said it is worrying that local companies like Soltuna and Guadalcanal Plain Plantation Oil Limited (GIPPOL) that are exporting their products to the European Union (EU) market stand the risk of going out of business because they will face ‘big trouble’ entering EU market.

Currently, he said local companies like Soltuna and GIPPOL are exporting their products easily into EU market on a duty-free-quota-free basis under the Everything But Arms (EBA) initiative.

And, he said these companies are competing in the EU market because they are accorded zero preferential tariffs and no restriction on import quantity under the EBA.

Salato said if the country graduates out of the list then the preferential arrangement will “go out the window”.

“Thailand, which is the largest tuna exporter to EU pays 24 percent tariff with strict import quota system to enter EU tuna market, Soltuna hardly compete with them. If Soltuna pays 24 percent tariff, I don’t think Soltuna will survive the market,” Salato added.

He said if Soltuna or GIPPOL are unable to compete then jobs of hundreds of locals, mostly women, are at risk.

Salato said the country can maintain its tuna export to EU with zero duty once it agrees to the Interim Economic Partnership Agreement (iEPA) or the Generalised Scheme of Preferences (GSP ++). He warned both are bad.

He said Pacific island countries need to make a strong case to the UN to review the criteria for assessing their development status.

“For Pacific islands countries, the vulnerability criteria should supersede economic indicators,

The pacific region is so vulnerable to natural disasters and global economic shocks that even if a country graduate, a single cyclone or earthquake can wipe out 30 years of development in a matter of hours,” Salato said.

He said Solomon Islands will join countries like China, India, Thailand, Philippines, Chile, Mexico to compete for the same market with similar products with the same set of trade rules.

Salato said graduation is a good thing the country should embrace but it comes with its own set of challenges that needs to be fully understood.

Vanuatu and Angola are scheduled for graduation over the next three years.

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