JCC Meeting in Hawaii – March 12, 2002

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SUMMARY RECORD

Meeting of the Trade and Investment Working Group of the United States/Pacific Island Nations Joint Commercial Commission (JCC)
HONOLULU, Hawai’i: March 12, 2002

INTRODUCTION

The United States/Pacific Islands Nations Joint Commercial Commission (U.S./PINs JCC) Trade and Investment Working Group (TIWG) convened at the East-West Center in Honolulu, Hawai’i on March 12, 2002.

The TIWG meeting was attended by representatives of the United States and the following PINs: the Cook Islands, Federated States of Micronesia (FSM), Fiji, Kiribati, Marshall Islands, Papua New Guinea, Tonga, and Tuvalu. New Caledonia was represented in an observer capacity. A list of the official delegates and other representatives who attended the meeting is found in Appendix A attached hereto.

WELCOMING REMARKS

The Honorable Ieske Iehsi, Secretary of Foreign Affairs of the Federated States of Micronesia and the PIN Co-Chair of the JCC, opened the meeting and welcomed the delegations. He requested that Pacific Islands Development Program (PIDP) Director, Dr. Sitiveni Halapua, provide the delegations with some background on why no annual JCC meetings had occurred since 1999.

The PIDP Director explained that no JCC annual meetings were held in 2000 and 2001 due to PIDP being unable to obtain prior approval for these meetings from the Chairman (or Vice-Chairman) of the Pacific Islands Conference of Leaders Standing Committee since both of these positions were vacant during this time period and meetings of the JCC’s TIWG could only be called with the approval of the Chairman.

Mr. William F. Brent III, representing the Office of Australia, New Zealand and Pacific Island Affairs, United States Department of State and the U.S. Co-Chair of the JCC, delivered opening remarks in which he:

• Expressed pleasure in seeing one of the main issues to be dealt with during the meeting being that of regional transportation given its importance for the growth of Pacific Islands and the U.S. economies;

• Reaffirmed the commitment of the U.S. in the post-9/11 environment to remaining actively involved in the Pacific Islands as the whole region was vulnerable to terrorism. He stressed that the U.S. would maintain and hopefully increase its current level of engagement in the PINs;

• Indicated that in the post-9/11 environment the U.S. would work with the PINs in improving arrangements such as airport and port security systems, and anti-money laundering measures for the banking sector; and

• Expressed on behalf of the U.S. Secretary of State the profound appreciation of the U.S. to the PINs for their outpouring of sympathy, support and cooperation after the September 11, 2001 attack.

The PIN Co-Chair of the JCC delivered opening remarks in which he highlighted the need to explore JCC activities in terms of how the JCC was going to move forward at this important juncture in the Commission’s history.

The PIDP Director explained that since the 1999 JCC meeting, and as instructed by the member countries, PIDP hired Mr. Scott Kroeker as JCC Project Officer. He also highlighted the progress made in the areas of: (a) PIN market access to and transshipment of exports through the U.S., (b) the Pacific Islands Business Network (PIBN); and (c) the Private Sector Workshops. As regards the latter area, two Workshops had been conducted: (a) a Small Islands States Workshop for Polynesian members of the JCC; and (b) a Micronesian States Workshop. With the approval of this meeting, and the Standing Committee Chair, the PIDP would organize a third workshop on air and sea transportation issues in the region with particular focus on the Melanesian States.

ADOPTION OF AGENDA

The draft meeting agenda was adopted without amendment.

TRANSPORTATION ISSUES AFFECTING TRADE

The JCC Project Officer reviewed recent private sector JCC workshop activities, particularly the Eco-Business Opportunities in Micronesia Workshop held in 2000. Based on the lessons learned, it was clear that future workshops could be more effective by more closely matching participants on the basis of interests and by limiting the scope of such workshops to specific, individual sectors. Based upon interests expressed by JCC members, the Project Officer recommended that the next workshop focus on the transportation sector. The U.S. Co-Chair suggested that if the next workshop were to deal with transportation then a major focus might include domestic inter-island transportation issues.

The PINs engaged in a general discussion in which there was widespread support for a workshop to be held to deal with transportation issues. Among the specific points raised during the discussion were the following:

• the problem faced by many PINs in not having suitable vessels for domestic inter- island services as well as the need to have appropriate, cost-effective infrastructure on smaller islands to service inter-island shipping;

• the need to deal with transportation systems including air, sea and land in an integrated and co-ordinated manner;

• a number of islands were lacking modern shipping and aviation infrastructure required to service the needs of PINs in relation to trade and the movement of persons;

• the relationship between public and private sector involvement in transportation was complex with no one solution for the various problems faced in the differing PIN economies;

• an important factor to be considered in addressing transportation issues was the asymmetry between the volume of PIN imports and exports;

• there might be a need in certain circumstances to provide incentives to encourage ships and aircraft to service remote areas in the PINs;

• the events of 9/11 had raised new security concerns that, while needing to be dealt with, could well affect transportation cost structures and raise costs;

• there was a need to deal with both shipping and air transportation in an integrated manner in the Workshop.

It was noted that problems of transportation had faced the region for many years and many studies, both regional and national had been carried out, upon which future, innovative and creative work should be based. The PIDP Director requested that all PINs provide copies of their transportation studies to PIDP. PIDP would then synthesize these studies for use in developing the transportation workshop.

MARKET ACCESS ISSUES

The JCC Project Officer reviewed the progress that has been made on the transshipment of agricultural products through Hawai’i from the PINs as an example of what could be done through co-operation and good will on the part of all concerned and the useful role that could be played by the JCC in this regard.

Leading the discussion on market access issues on behalf of the PINs, Fiji proposed investigating the possibility of negotiating a market access arrangement with the U.S. This initiative taken by Fiji to conduct a pre-feasibility study of such an arrangement was supported by a number of other PINs that also stressed the importance of considering issues relating to trade in services and investment. Those PINs looked forward to receiving advice from Fiji on the results of the above pre-feasibility study. The Island States having a Compact of Free Association (hereafter “Compact”) with the United States indicated that, for them, the key issues related more to production and transportation issues, including new issues concerning security, than to access issues.

It was noted that the spirit of the Fiji initiative was consistent with a view expressed at the last Pacific Islands Conference of Leaders (PICL). In this regard, it was suggested at the 2001 PICL meeting that perhaps there needed “to be a stronger connection to the U.S. through a legal instrument providing preferential access and other protections to help encourage investment and capital flows into the region. Without this, the adverse effects of globalization might be all that’s felt in the region.”

The PIDP Director observed that, in the past, the JCC had addressed both bilateral and regional trade concerns of the PINs. It would be important for PINs to indicate which approach they would like the JCC to take in relation to the market access issues raised during this meeting.

Some PINs felt the need for a better appreciation of the Fiji proposal as it would relate to the Micronesian “Compact” countries. In response to this concern, Fiji informed the meeting that what they had expressed was an initiative to conduct a pre-feasibility study. Should the study find it useful to conduct a full feasibility study, all PINs would be fully consulted on the next step to be taken.

In response to a private sector request that came from the PINs, the PIDP Director offered the idea that the JCC might undertake a survey of Pacific Islanders living on the U.S. West Coast to determine their socioeconomic characteristics and needs. This survey would include questions about goods and services that could be delivered by PINs.

As regards the proposed survey, it was asked whether a survey methodology could be designed and implemented that would yield valid information. The PIDP Director responded to this concern by noting various sampling techniques to ensure an accurate survey process.

SECURITY ISSUES

The U.S. Co-Chair began by re-stressing that nothing is the same in the post-9/11 period including trade-related transportation regimes. He emphasized that new region-wide terrorism vulnerabilities will impact upon PINs in important economic sectors such as tourism. The Co-Chair then introduced Mr. Nat Aycox, Area Port Director, Port of Honolulu, U.S. Customs/Department of Treasury.

Mr. Aycox spoke about how the events of September 11, 2001 have impacted on U.S. Customs priorities. His presentation stressed:

• Battling terrorism was now the number one mission priority of the U.S. Customs;

• U.S. Customs remained at the highest level of alert and would continue in this mode for the foreseeable future;

• In the war on terrorism, U.S. Customs would make a priority of: (a) border security; (b) anti-terrorism money laundering measures; and (c) the monitoring of strategic exports from the U.S;

• U.S. border security would now be pushed outward from U.S. national boundaries/ points-of-entry to foreign points-of-departure through setting up cooperative security regimes with foreign partners. Trade and other incentives would be offered to partner nations in exchange for their cooperation in this effort. Improving sea container security in international trade was a special concern for the U.S.

Concern was expressed about the PINs being used as a transshipment stop for sea containers containing contraband, especially drugs, coming from the West Coast of the United States and heading to other Pacific destinations.

The Co-Chair then introduced Commander John Shiffling, Executive Officer, U.S. Coast Guard Marine Safety Office.

Commander Shiffling spoke on U.S. Coast Guards efforts at preventing (rather than again having to react to) terrorist attacks against the United States. His presentation highlighted:

• The U.S. Coast Guard was directing its limited resources at protecting high-risk targets – that is, high probability/high consequence targets (e.g., in Hawai’i these would be a cruise ship terminal with a docked ship loaded with passengers, offshore petroleum ship moorings);

• U.S. Coast Guard criteria used in making a decision to board an inbound vessel included: Crew make-up, type of cargo, country of origin, etc;

• Control of commercial vessel movement was a major concern of the U.S. Coast Guard;

• U.S. Coast Guard on-land security measures included conducting harbor patrols to ensure defenses are intact and any suspicious activities were investigated;

• In Hawai’i, cruise ship and sea container security were of special focus for the U.S. Coast Guard;

• U.S. Coast Guard would be a resource where a PIN could come and access information about port security.

The Co-Chair then introduced Mr. Alan Agor, Honolulu Director, U.S. Transportation Security Administration (formally the U.S. Federal Aviation Administration [FAA]).

Mr. Agor spoke on his agency’s efforts at thwarting terrorist attacks against the United States airline system. His presentation emphasized:

• There were reasonably priced, portable airport X-ray machines and other security devices available that could help PIN governments to improve security at their airports;

• Civil Aviation Security Liaison Officers stationed at the U.S. Embassy in Tokyo and in Guam could work with PIN governments toward improving their airports’ security.

The PINs expressed concern that they were vulnerable as possible staging locations for a terrorist attack on the U.S. In this regard, the PINs would like to see a comprehensive interpretation of security that included PIN security training and capacity building activities that require the assistance of the United States. This assistance could be complementary to the support provided by New Zealand and Australia.

The U.S. Co-Chair informed the meeting that the United States planned to conduct airport security seminars in Fiji and Honolulu this month to which some of the PINs have been invited.

It was stressed by PINs that the security concerns highlighted the need to build stronger island economies through better market access into the United States. Increased market access to U.S. would help strengthen PIN economies and so provide for additional resources to allocate for terrorism prevention.

The PIN Co-Chair expressed the group’s appreciation to Mr. Aycox, Commander Shiffling, and Mr. Agor on their excellent and timely presentations on the topic of security.

The PINs expressed their appreciation to the U.S. and PIN Co-Chairs, and the PIDP Director and his staff, for a successful meeting.

The PIN and U.S. Co-Chairs formally adjourned the meeting.