Papua New Guinea and the EU

Political cooperation

The partnership between the EU and Papua New Guinea (PNG) is guided by the principles and objectives of the Cotonou Agreement. This Agreement covers areas such as political dialogue, trade and development cooperation.

The partnership between both sides is strong due to an ever increasing political dialogue, where they have frequently engaged and exchanged on many topics of mutual concern such as human rights, gender issues, elections, matters relating to positions taken in the United Nations or visa matters incuding discussions of more development cooperation and consistently better aid delivery.

The EU’s ultimate goal is to build stronger political relations with PNG, and the entire Pacific region, while supporting good governance, security and sustainable development.

Economic and trade cooperation

With a population of more than 7 million and an annual GDP of over USD 15 billion, PNG has by far the largest economy in the Pacific region.

PNG has experienced more than 10 years of consecutive economic expansion at an average GDP growth of 6% per year. Yet despite this impressive growth, the country has one of the highest rates of child and maternal mortality, and the lowest rates of school attendance and literacy in the Asia-Pacific region.

PNG’s economic outlook is improving through the PNG Vision 2050 and Strategy Plan 2010-2030. This plan aims to both reduce the country’s excessive reliance on mineral resources and support the diversification of the economy.

Trade relations

These last twelve years, Papua New Guinea has embarked on major structural reforms, policy development and adjustments in the different sectors of the economy to support the diversification of the economy.

Apart from minerals, agriculture still represents about a third of PNG’s GDP. It also provides employment to most of the population and looks set to remain the backbone of economy.

As exports comprise some 90 % of PNG’s GDP, trade liberalisation is an integral part of achieving strong and sustained economic growth, and poverty reduction.

PNG was the first country in the Pacific region to sign the 2009 interim Economic Partnership Agreement with the EU. Under the agreement, all PNG exports can access the EU market duty and quota free for all products made in PNG to the European Union markets of 500 million consumers.

To help Papua New Guinea to tap on this opportunity, the European Union in line with the PNG Development Strategic Plan 2010-2030, has put into place a Trade Related Assistance Programme, which aims to increase PNG capacities to benefit from trade and investment with Europe and the rest of the world.

To develop and unleash the productive and employment potential of the rural economy, the EU is also increasing trade opportunities for rural and costal entrepreneurs by reducing bureaucracy, rules and regulations.

See Rural Entrepreneurship, Investment and Trade.

Technical and financial cooperation, development cooperation

Under the European Development Fund (EDF), the EU provides financial support for development aid, notably under the 11th EDF Pacific Regional Indicative Programme (Pacific RIP) and the 11th EDF National Indicative Programme (NIP).

A key focus of the Pacific RIP is to improve the economic, social and environmental benefits for Pacific through better regional economic integration, and the sustainable management of resources and the environment.

The 11th EDF National Indicative Programme (NIP) details the EU cooperation priorities with PNG for the years 2014-2020. It is based on the global objectives of the EU-ACP cooperation, PNG's own national policies and development strategy and implementation plans, the 'European Consensus for Development' the Busan Partnership for effective development cooperation and guiding principles of the 'Agenda for Change' for greater aid effectiveness and impact.

The PNG Government's development strategies are particularly targeting improved economic development and prosperity in rural areas, which have been lagging behind since Independence and where about 85% of the population lives. All government's sector strategies, and thus EU's support aligned to these, are contributing to this goal.

In particular, the 11th EDF is supporting country reforms in areas that have a strong multiplier effect. For reforms to be successful, five key policy and institutional issues need to be addressed through an integrated approach:

1. Promoting a conducive business environment

2. Ensuring market access and regional integration

3. Investing in backbone infrastructure

4. Establishing sound regulatory and institutional frameworks

5. Investing in human capital

In the NIP, the choice of three intertwined focal sectors, outlined, reflects the need for such an integrated approach to support PNG's structural socio-economic transformation. The 11th NIP helps fight poverty reduction and improves lives in a more equitable and wide ranging approach to sustainable development.

The assistance provided through the EU Delegation focuses on delivering long-term support for Rural Entrepreneurship, Investment and Trade, Water, Sanitation and Hygiene (WASH) and Education.This strategy is in sync with PNG’s development ambitions. (See entries below for more details).

Rural entrepreneurship, investment and trade

Through the NIP, the EU is contributing €85 million to Rural Entrepreneurship, Investment and Trade in PNG.

The funding programme focuses on boosting the rural economy to improve sustainable and inclusive economic development and job creation, thus leading to poverty reduction.

Efforts will therefore be made to enhance:

Rural productive employment and entrepreneurship;
Rural-urban connectivity of, poor under-served rural and coastal areas.

Water supply, sanitation and hygiene (WASH)

The NIP provides €60 million to Water Supply, Sanitation and Hygiene (WASH) in PNG.

Specific objectives include:

to improve the living conditions through increased coverage for water and sanitation and improved hygiene in line with the national WASH policy,
to enable a healthier and safer environment particularly for women and children, reducing the impact of water borne diseases and hygiene related illnesses, and
to improve governance and quality of service delivery in the WASH sector.

Education

In the Education sector, about €30 million has been allocated through the NIP to promote human resource development through improving access to and quality of the education system.

The NIP's strong focus on Technical Vocational Education and Training (TVET) aims at promoting the development of a skilled labour force adapted to the needs of the country. More specifically, the objective is to contribute to capacities at national and provincial level to enable better access to and quality of education for students in secondary vocational institutions.