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Considers least developed status versus WTO membership

By Jeff Waters

MELBOURNE, Australia (Radio Australia, April 15, 2009) - Vanuatu could be victim of its own success. In these tough economic times it seems hard to believe any country could end up in a bind for doing too well, but that’s exactly the situation confronting the Pacific nation of Vanuatu.

Until now, it’s been living in relatively comfortable isolation from the rest of the international economic community.

Even the region’s most remote societies are being drawn into globalization.

Vanuatu faces a difficult transition from its status as a Least Developed Country.

The island nation has rich, volcanic soil and a constant supply of fresh water. Economic growth has been strong and tourists continue to flock.

All in all, life has not been bad for Vanuatu, a nation deemed one of the world’s least developed countries. But this tiny Pacific nation is being forced to make some hard choices because it’s been doing a little too well.

Recent events have led to difficult negotiations for Vanuatu’s Foreign Affairs Minister and other senior members of the country’s government.

Vanuatu may be about to lose its United Nations designation as Least Developed Country (LDC) and if that happens, the foreign aid money which flows into the country could be cut.

Foreign affairs minister Bakoa Kaltongga acknowledges that the aid the country has received as an LDC could now be seen as a double-edged sword.

"We’ve been successful in getting to graduate from the LDC but there will come a time where we can no longer argue the case because we will run out of facts and supporting evidence to suggest that we should remain," he said.

To make matters more complicated, the World Trade Organisation (WTO) is knocking at the door, suggesting Vanuatu become a full member of the international marketplace.

All of Vanuatu’s major trading partners are in the WTO and have had to adjust the level of tariffs they charge on imported goods.

But this country makes almost 20 percent of its government revenue from tariffs.

Bakoa Kaltonga says the government is playing a waiting game, saying, "We’re not committed."

"Obviously you can see our economy is performing quite well without acceding to the WTO but there will come a time when we will need to commit but we’ll have to make absolutely sure that our commitment and our position is for the best possible conditions for our people in Vanuatu."

The economic developments and how they are being handled are being watched closely by the Port-Villa based Pacific Institute of Public Policy.

Institute spokesman Derek Brien says Pacific Island governments are starting to recognize what he describes as the need to move to economic integration.

"It’s often better to have your seat at the table so that your voice can be heard," he said.

"With the WTO; I know it’s got its critics, but at least in that forum your seat counts for one vote, so it’s not like some of the other multilateral organizations such as the World Bank where votes are weighted according to contribution.

"So, by being at the table at least Vanuatu’s voice can be heard."

Vanuatu and other developing countries must look beyond the immediate effect of tariff reform and make long-term plans to create new income streams.

"That’s where a true development partnership, as opposed to a free-for-all trade negotiation is going to be more beneficial to both the bigger players; Australia, New Zealand and the Pacific Island countries."

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