ADB backs Samoa’s WTO membership

Vice-President of Asia Development Bank (ADB) Lawrence Greenwood Jr. says the bank supports Samoa’s accession to the World Trade Organisation.

“Accession of nations such as Samoa to WTO is something we encourage and we are happy to support,” Greenwood told ISLANDS BUSINESS.

Samoa is not the only Pacific Islands country trying to become a member of WTO.

Vanuatu applied in 1995 and the WTO Working Party for its accession agreed to Vanuatu’s accession package in October 2001. But shortly before the accession package was to be sent for the approval of Ministers in Doha in November 2001, the Vanuatu authorities informed the WTO secretariat that they needed more time to consider the package, according to Robert Sisilo, the Pacific Permanent Representative to the Geneva-based WTO. Sisilo will be completing his term there in July.

He said Vanuatu’s accession can now be completed only after interested members, particularly the United States, and Vanuatu can agree to the changes, if any, in the package already agreed.

Samoa, he said, applied to join the WTO in 1998 and has since tried to negotiate her way in. The main difficulty they face is that accession negotiators are fundamentally different from other WTO negotiations.

“During accession, the applicant cannot make any demands of other WTO members. Either they have to accept the demands of WTO members or not become a member.

“In such a process where a party cannot impose any cost for demands placed by WTO members, the outcome is predictable.

“The negotiations will result in what we have seen—long protracted negotiations where acceding countries have had no option but make WTO plus concessions.”

Sisilo said what is needed is a binding mechanism for fast-tracking accession where one party is fundamentally disadvantaged and will protect those who are weak and disadvantaged, and create a relatively level playing field.

Meanwhile, the ADB vice-president has described the status of Samoa’s economy as “good” and its entry into WTO can only improve local services.

Despite his optimism, the latest regional outlook report by ADB projects growth to slow to 3 to 3.5% in the 2008 and 2009 financial years for Samoa.

The Central Bank of Samoa also recorded unfavourable outcomes under the major economic indicators.

According to the January 2008 Foreign Trade report, the merchandise trade deficit increased due to rising import payments and lower export earnings while tourism revenue recorded a seasonal decline.

Contributing factors to the trend in the month’s merchandise trade figures were a general increase in global commodity prices, including that of crude oil, as the market remained volatile.

ADB however says: “The forecasts assume that the government refocuses on economic and public sector reforms, particularly those that reduce the costs of doing business.”

In a submission made by Samoa to ADB, the decision to enter WTO is in line with government reforms and complements forward looking economic policies by government.

The report states: “As a small open economy, dependent on a narrow resource base, Samoa’s economic activity is largely dependent on limited sectors including agriculture, tourism, small-scale manufacturing and fisheries.

“As such, its economic performance is impacted heavily by external factors in the form of commodity export prices, remittances, tourism and external aid resources.”

But the accession status of Samoa has met with heavy criticisms from local non government organisations and regional bodies.

Oxfam New Zealand says that trade could help reduce hardship in the Pacific, but international trade rules are stacked in favour of rich countries.

“Pacific governments are under pressure to open up their markets to goods and services from overseas yet history shows that opening up national markets too quickly or in the wrong way can increase hardship and poverty,” Oxfam stated.

The Working Party on the accession of Samoa was established on the July 15, 1998.

The Memorandum on Samoa’s Foreign Trade Regime was circulated in February 2000.

A first revision of the draft Working Party report was circulated in November 2006. Bilateral market access negotiations on goods and services are underway on the basis of an initial offer on goods and a revised services offer.

The last draft working party report was made in November 2006.

The local Ministry of Foreign Affairs and Trade say all working papers for Samoa’s accession to WTO are in order.
—By Cherelle Jackson.

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Nautilus moves ahead in deep water mining 

Nautilus Minerals Inc. has awarded a US$116 million (K335.26 million) target price contract to Technip USA Inc to provide engineering procurement and construction management (EPCM) services.

The services is for the Riser and Lifting System (RALS) components of the company’s deepwater seafloor massive sulphide extraction system, comprising subsea pumps; riser pipe; riser handling system; and associated deck equipment.

Chief executive of Nautilus, David Heydon, said with the award of the K187 million (GBP33 million) Seafloor Mining Tool (SMT) contract to Soil Machine Dynamics Ltd together with US$116 million for RALS, Nautilus’ total capital commitment to date on the mining system is approximately US$186 million (K537.5 million).

“This expenditure is covered by our cash in bank of approximately US$310 million (K895 million) as of December 31, 2007,” he said,

A competitive front-end engineering design programme is underway to evaluate the SMT and the RALS integration requirements for the various mining production vessels under consideration. This will allow competing Mining Services contractors to finalise their outstanding tender clarifications. Nautilus proposes to select the vessel and Mining Services contractor in the second quarter of 2008. “With this timetable, Nautilus remains on track for production at its Solwara 1 Project in the third quarter of 2010,” said Heydon.

The RALS contract resulted from a competitive tendering process involving five specialist riser contractors from the oil and gas industry.

The contract was awarded to Technip as it provided Nautilus with the best technical solution and the most cost effective approach to the delivery of the equipment.

Technip, with a workforce of 22,000 people worldwide and annual revenues of almost Euro 7 billion, is an integrated engineering, technology and construction services provider to the worldwide oil/gas and petrochemical industry and one of the world’s leaders in deepwater riser technology.

The RALS EPCM contract is based on a target price format which incentivises the contractor to maintain cost expenditure within agreed targets and to ensure the timely delivery of equipment.

The majority of the equipment components under this contract will be provided on a fixed price basis by oilfield equipment specialists.

Orders for the majority of the equipment will be placed before the end of May 2008.

Although a newcomer in Papua New Guinea’s mining scene, Nautilus has made significant progress with the discovery of four new mineralised systems and achieving a string of world’s first in ROV drilling, geophysics and the world’s first NI 43-101 compliant resource estimate for a Seafloor Massive Sulphide (SMS) system.

Heydon said the company is focussed not just on the development of a new mine but of a new industry and the success the company experienced in 2007 has positioned it well to become an emerging producer in 2010.

Some of the major achievements made last year which the company has highlighted are the raising of US$214 million (equivalent) gross proceeds equity throughout the year in three brokered and strategic shareholder placements, with US$310 million (equivalent) in cash and cash equivalents held on deposit with major banks at year end.

The company also secured the grant in 2007 of 56 new exploration licenses covering approximately 140,000 sq km in the territorial waters of Papua New Guinea, Solomon Islands and Tonga. —Baeau Tai

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Digicel battles PNG Telecom’s carrier status

As the Papua New Guinea government scrambles to find ways to protect its telecommunication business from being minced by competition, Caribbean-based Digicel is swinging another punch in its recent move to take the matter to court. 

In a hearing scheduled for May 21, Digicel is asking for a court declaration against a number of decisions contained in the country’s revised ICT Policy, approved by its National Executive Council in February and endorsed by Parliament last month.

Chief among those changes is government’s plan to make state-owned PNG Telikom, the only licensed general carrier, for the duration of Phase One of the two-phased transition towards full deregulation of the country’s telecommunication market.

In the government’s revised ICT Policy, PNG Telikom will, as the exclusive general carrier, “continue to have the reserved rights over the fixed line network and international gateway” and that “no general carrier rights will be granted to mobile carriers in respect of the fixed line network or the international gateway during Phase 1.”

While Digicel will continue to operate as a mobile carrier using its own network, it will not be allowed to operate its own international gateway, as this will be a right reserved only for a general carrier. 

As a result, Digicel will be required to shut its gateway, which it had been using shortly after launching its PNG operation in 2006. 

Following last month’s endorsement by PNG’s Parliament of amendments to the country’s Telecommunication Act 1996 (amended) to facilitate the changes, details of Digicel’s legal resort was posted on the popular PNG blog www.masalai.wordpress.com http://www.masalai.wordpress.com, in an originating summons that challenged the policy direction the PNG government has taken. 

The summons name Telikom PNG Limited as a first defendant as well as PNG’s Communication and Information minister Patrick Tammur, the independent state of Papua New Guinea and the Independent Consumer and Competition Commission (ICCC) as other defendants, and mounts a Digicel roadblock across the PNG government’s attempt to charter the course of its telecommunication industry. 

Digicel is arguing that within the meaning of the term “general carrier” in the Telecommunications Act 1996 (PNG—as amended), PNG Telikom “does not have the exclusive right or exclusive authority to operate as a general carrier” and “to hold a license as a general carrier”. 

The Jamaica-headquartered pan-Carribean GSM provider also wants the PNG National Court to declare the revised ICT policy “is based on an incorrect premise, namely that Telikom, immediately prior to the date of approval of the government policy, had an exclusive right to install and operate an international gateway by which telecommunication networks in Papua New Guinea are connected to international markets”.

In the summons, Digicel labelled the government  policy on reserving exclusive rights for PNG Telikom as “unlawful and of no force and effect”. It is also asking the court to declare that the ICCC is not required to carry out the implementation of the ICT policy to allow that to happen.

In a press release issued immediately after Parliament’s approval of the amended act, Digicel PNG CEO, Kevin O’Sullivan, denounced the development, saying the “amended legislation is a clear step backwards for Papua New Guinea”.

“Digicel advocates a regulatory environment for telecommunications including legislation which is pro-competition and one that places the interests of customers first,” O’Sullivan said. 

“The people have tasted the benefits of competition and have the right to continue to enjoy them.

“Lower prices, better quality, increased coverage and the introduction of new services such as being able to use your Digicel mobile phone in 91 countries would not have occurred without a fair and competitive mobile market.”

Closing Digicel’s gateway, he stressed, would result in higher international calling rates and lower quality of service due to network congestion.

But Digicel’s legal recourse, if successful, would only add to the difficulties the PNG government faces as it tries to save PNG Telikom, which it admits is in need of a major transformation. 

In the amended ICT policy, Phase One is technically a grace period in which this transformation is expected to take place.

An option the government is now exploring is the sale of part of ‘B’ Mobile, the mobile telephone arm of PNG Telikom.

This exercise has been linked to a Hong Kong-based General Enterprise Management Services International (GEMS), a private equity fund manager that has former US Secretary of State Dr Henry Kissinger serving on its advisory council.

While the PNG government has maintained it is committed to pursuing open competition in the telecom sector, albeit via a staged approach, it has been criticised by a section of the PNG community who sees the move to shut down Digicel’s gateway as government sacrificing the interest of the PNG public for the protection of its telecom business.
—By Dionisia Tabureguci