Delegation of the European Union to Papua New Guinea

Do Trade Agreements Result in Net Benefits or Costs to PNG?

24/11/2016 - 07:21
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A mission to Kimbe and Lae seeks primary insights

Papua New Guinea (PNG) has been actively engaged in negotiations of trade agreements with key partners over the last decades. Notably, PNG is party to an Economic Partnership Agreement (EPA) with the European Union (EU); it is a member of a Trade Agreement among the Melanesian Spearhead Group Countries; it is also a signatory to the Pacific Islands Countries Trade Agreement (PICTA) and the South Pacific Trade and Economic Cooperation Agreement (SPARTECA).

As an active participant in the Asia-Pacific Economic Cooperation (APEC) process, PNG is also considering its next moves to engage with members of the APEC group, collectively and bilaterally. The question in the minds of many has been whether, or not, trade agreements result in net benefits or costs to PNG. In other words, is it really worth the trouble for PNG to negotiate all these trade agreements or, might it make more sense to adopt a more strategic approach and to put some of these resources in other programs of Government?

To help answer this question, a special study has been commissioned to provide some insight. Funded under Component 2 of the EU-PNG Trade Related Assistance Phase 2 (TRA2) Programme, the study aims at conducting a costs-benefits analysis of the various trade agreements that PNG is party to, using primarily macroeconomic data and focused largely on the two major trade agreements, the EPA and the Melanesian Spearhead Group Free Trade Agreement (MSGFTA).

To enrich the quality of the macroeconomic analysis a mission is being conducted to two provinces (Lae and West New Britain) that produce most of the exports of the country covered under those trade agreements to obtain some primary data. However, the study will also take into account some sector-specific issues to determine what sort of impacts might result in production and exports of major products.

The mission is headed by Dr. Claudius Preville, Key Expert for TRA 2 and Dr. Evious Zgovu, a Non-Key Expert contracted under the project specifically to undertake the cost benefits analysis. The technical team is supported by Mrs. Bridgette Kamish, Focal Point at the Department of Trade and Industry with responsibility for Component 2 and Mr. Simon Waike, a project officer attached to the Project Management Unit.

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