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trade policies by sector

1 Overview

Agriculture is one of the largest economic sectors in Solomon Islands; it consists of small-scale production of subsistence and cash crops, and some large-scale plantations. Assistance is limited, and the State has gradually reduced its participation in this sector. Solomon Islands has significant fish resources; the bulk of the commercial fishing fleet is composed of foreign flag vessels licensed under bilateral and plurilateral fisheries agreements. Forestry has been a major driver of economic growth: exports of timber account for a large share of total merchandise exports, and taxes on timber are a major source of fiscal revenue. Practically all mining production ceased in mid-2000 amid civil strife. However, mining is expected to regain its former importance with the projected reopening of a major gold mine in 2010. Electricity is expensive, low-quality, and largely unavailable beyond the capital city, but Solomon Islands is taking steps to improve the financial situation of the state-owned electricity monopolist. Manufacturing is limited to a handful of activities.

Solomon Islands undertook sector-specific commitments under the GATS in only a handful of sectors. There is significant foreign participation in the financial system, and efforts are being made to strengthen the prudential framework and expand access to credit. Solomon Islands intends to introduce competition into the telecommunications market, currently supplied by a single firm. Maritime transport is key for Solomon Islands international and domestic trade. Foreign flag vessels may not provide cargo or passenger cabotage. The legislative framework governing civil aviation was revamped in late 2008 to foster competition and help attain international standards. The sole national airline is wholly state owned and in a weak financial position. The State owns and manages all international port and airport infrastructure. Few professional services are regulated; there have been significant efforts to reduce the time to process work permits for highly skilled foreign workers.

2 Agriculture

Agriculture is one of the largest economic sectors and a source of livelihood for most of the population. The sector consists of small-scale production of subsistence and cash crops, and some large-scale plantations. Available information suggests that assistance to the sector is limited, with current policy seeking to enhance extension and research activities. The State has gradually reduced its participation in plantation agriculture. Although a statutory body has ample powers regarding export marketing of certain commodities, since 2002 its activities have been limited to the enforcement of quality standards for copra and cocoa exports.

Agriculture accounts for 20% of GDP and is among the largest sectors of the economy. Four-fifths of the population lives in rural areas and derives its livelihood primarily from small-scale production of subsistence and cash crops. Subsistence crops include sweet potato and other root crops, leafy greens, and fruits.[1] The annual output of sweet potato, which represents 65% of the total volume of locally grown staple foods, and other important staple foods (cassava, banana, taro, coconut, and yam) is estimated at 430,000 tonnes, with a value of SI$411 million.[2] The main cash crops include cocoa and copra. There are also large-scale oil palm and coconut plantations producing mainly for export. Oil palm, coconut, and cocoa account for approximately 17% of exports (Table IV.1). Lack of adequate domestic transport infrastructure and credit, and the high transaction costs of securing leases on communal land severely constrain agricultural output.[3]

Table IV.1

Cash crop exports, 2000-07

| |2000 |2001 |2002 |2003 |

| |

|Horizontal limitations |

|3. Construction and related | | | |

|engineering services | | | |

|Australia (initialled on 01.04.1998) | | | |

|.. |.. |.. |.. |

|Fiji (10.07.1990) | | | |

|3rd and 4th freedoms |Free pricing; however, if an |Pre-determined |Single |

| |aeronautical authority files a | | |

| |"notice of dissatisfaction" with | | |

| |respect to a proposed tariff, the | | |

| |authorities must set the tariff | | |

| |through consultations or arbitration | | |

|Nauru (10.09.2006) |

|5th freedom for Nauru (to Australia); |.. |Pre-determined |SI: Solomon Airlines and Pacific |

|"future" 5th freedom for Solomon | | |Air Express |

|Islands; 3rd and 4th freedoms for | | |Nauru: Nauru Air Corporation |

|Pacific Air Express | | | |

|New Zealand (30.05.1990) | | | |

|5th and 7thfreedoms |Free pricing; however, if an |.. |Multilple; designation may be |

| |aeronautical authority files a | |refused if substantial ownership |

| |"notice of dissatisfaction" with | |and effective control of the |

| |respect to a proposed tariff, the | |designated airline are not vested |

| |authorities must set the tariff | |in the party designating the |

| |through consultations or arbitration | |airline |

|Papua New Guinea (PNG) (08.05.1990) |

|5th freedom for PNG, subject to a |Dual approval |Pre-determined |SI: Solomon Airlines |

|"satisfactory commercial agreement" | | |PNG: Air Niugini |

|between designated airlines | | | |

|Vanuatu (23.05.1990) |

|3rd and 4th freedoms |Dual approval |Pre-determined |SI: Solomon Airlines Ltd. |

| | | |Vanuatu: Air Vanuatu (Operations)|

| | | |Ltd. |

.. Not available.

Source: WTO Secretariat.

Solomon Islands has signed, but not yet ratified, the Pacific Islands Air Services Agreement (PIASA), which has been ratified by Cook Islands, Nauru, Niue, Samoa, Tonga, and Vanuatu, and entered into effect in October 2007. From April 2008, airlines designated by each PIASA member can operate direct services between their home country and other member countries (third and fourth freedom rights), and services through their home country between two other member countries (sixth freedom rights). From October 2008, designated airlines can operate services between their home country and another member country through a third member country (fifth freedom rights). From April 2010, designated airlines can operate services between their home country and a non-member country through a third member country, to the extent that this is permitted under a bilateral agreement with the non-member country. The PIASA does not contain provisions on seventh freedom rights, and explicitly excludes eighth freedom rights.

International air services to and from Solomon Islands are subject to licensing.[124] Licences are granted by the Minister of Communication and Aviation, and must conform to the relevant air services arrangement.

1 Professional services

Solomon Islands undertook GATS commitments with respect to legal, accounting, architectural, and engineering services (Table IV.4).

Few professional services are regulated in Solomon Islands. Foreign professionals may provide legal, accounting, and architectural and engineering services; they must obtain a work permit and a "permit to enter and reside" in Solomon Islands.[125] The Commissioner of Labour is responsible for granting work permits. In evaluating work permit applications, the Commissioner of Labour must ensure that Solomon Island citizens are not available to perform the work in question, and that the applicant is properly qualified.[126] If the work permit pertains to a company employee, the Commissioner of Labour must assess the company's training programme to ensure that Solomon Island citizens are receiving "appropriate training".[127] According to the authorities, the delay for processing work permits for highly skilled workers has been reduced from several months to five days.[128]

Residency permits are granted by the Director of Immigration of the Ministry of Commerce, Industries, Labour, and Immigration, and are valid for renewable periods of two years. The application requirements for a residency permit are available online.[129]

There is no general law governing professional services in Solomon Islands; the few professions that are regulated are governed by sector-specific legislation. Nor is there legislation establishing procedures for recognizing the equivalency of foreign-based qualifications. No information is available on whether any professions are reserved for nationals.

The supply of accounting, architectural, and engineering services is not regulated in Solomon Islands.

To practice before a court, lawyers must obtain a "certificate of qualification" issued by the Chief Justice.[130] The requirements for obtaining the certificate are specified in the Legal Practitioners Act.[131] The Legal Practitioners Act does not establish any nationality requirements for legal practitioners. Notaries public must be appointed by the Chief Justice.[132] The Notaries Public Act does not establish any nationality requirements for notaries public. The Solomon Islands Bar Association represents lawyers as a profession.

REFERENCES

Asian Development Bank (2005a), Private Sector Assessment for Solomon Islands, July. Viewed at: .

Asian Development Bank (2005b), Technical Assistance Solomon Islands: Supporting Business Law Reform, November. Viewed at: .

Asian Development Bank (2006), ADB Country Strategy and Program Update: Solomon Islands 2007-09, September. Viewed at: .

Australian Government (2004a), "Country Action Plans: Solomon Islands", Pacific Regional Transport Study, Volume 2, June.

Australian Government (2004b), Solomon Islands: Rebuilding an Island Economy. Viewed at: .

Australian Government (2008), Pacific Economic Survey. Viewed at: .

Australian Government and AusAID (2006), Solomon Islands Smallholder Agriculture Study. Viewed at: 4088_5412_1071_6193_2813.

Campling, L., E. Havice, and V. Ram-Bidesi (2007), Pacific Island Countries, the Global Tuna Industry and the International Trade Regime: A Guidebook, Honiara, April.

CBSI (undated), Exchange Control Policies. Viewed at: .

CBSI (2007a), 2006 Annual Report, 21 June. Viewed at: .

CBSI (2007b), "Understanding the Interest Rate Spread in Solomon Islands", Focus Report, March. Viewed at: .

CBSI (2008a), Annual Report 2007, 30 April. Viewed at: .

CBSI (2008b), Monthly Bulletin, December. Viewed at: .

CBSI (2008c), "Private Sector Credit in Solomon Islands: Key Trends and Implications for Growth", Focus Report, June. Viewed at: .

CBSI (2008d), Quarterly Review, September. Viewed at: .

CBSI (various issues), Monthly Economic Bulletin and Quarterly Review. Viewed at: .

Coalition for National Unity and Rural Advancement Government (2008a), Policy Statements, Honiara, January.

Coalition for National Unity and Rural Advancement Government (2008b), Policy Translation and Implementation Framework, Honiara, February.

European Commission (2004), Pacific ACP-EC EPA Negotiation: Joint Road Map, 15 September. Viewed at: library/files /EC_EN_150904_DGTrade_Pacific-ACP-EC-EPA-Negotiations-Joint-Road-Map.pdf.

Flaming, Mark W., and Stuart Mathison (2007), Financial Service Sector Assessment: Kiribati, Tuvalu, Samoa, Solomon Islands, Vanuatu, Paper prepared for the United Nations Development Programme and the United Nations Capital Development Fund, May. Viewed at: . org/english/microfinance/ docs/index.php.

Government of Solomon Islands (undated), Medium Term Fiscal Strategy: 2008-2013, Honiara.

Government of Solomon Islands (2008), Medium Term Development Strategy 2008 to 2010, July, Honiara.

Government of Solomon Islands (2009), Approved 2009 Development Estimates, 2 January, Honiara.

IMF (2004), Solomon Islands: Selected Issues and Statistical Appendix, Country Report No. 04/255, August, Washington, D.C.

IMF (2006), Solomon Islands: Statistical Appendix, Country Report No. 06/363, October, Washington, D.C.

IMF (2007a), Solomon Islands: 2007 Article IV Consultation—Staff Report; Staff Supplement; and

Public Information Notice on the Executive Board Discussion, Country Report No. 07/304, September, Washington, D.C.

IMF (2007b), Solomon Islands: Tax Summary and Statistical Appendix, Country Report No. 07/303, September, Washington, D.C.

IMF (2008a), Solomon Islands: 2008 Article IV Consultation—Staff Report; Staff Supplement;

Public Information Notice on the Executive Board Discussion, Country Report No. 08/358, November, Washington, D.C.

IMF (2008b), Solomon Islands: Tax Summary and Statistical Appendix, Country Report No. 08/359, 10 September, Washington, D.C.

International Finance Corporation and The World Bank Group (2005), Review of Investment Incentives: Solomon Islands, December. Viewed at: .

Meyrick, Stephen (2008), Solomon Islands: Implementation of Interisland Transport Reforms, Project Number 38150, March. Viewed at: 38150-SOL.

Ministry of Development Planning and Aid Coordination (2007), Solomon Islands Agriculture and Rural Development Strategy: Building Local Foundations for Rural Development, Honiara, March.

Ministry of Finance and Treasury (undated), Solomon Islands Budget 2008: Budget Strategy and Outlook, [provided by the authorities].

Ministry of Finance and Treasury (2007), Quarterly Report on Exemptions, Report No. 08/02, September, Honiara.

Ministry of Finance and Treasury (2008), Quarterly Report on Exemptions, Report No. 07/04, May, Honiara.

National Parliament of Solomon Islands (2007a), "Report on Subsidiary Legislation", National Parliament Paper No. 25 of 2007, 22 February.

National Parliament of Solomon Islands (2007b), "Report on the State Owned Enterprises Bill 2007", National Parliament Paper No. 48 of 2007, 28 August.

Office of the Auditor General (undated), Annual Reports 2002-06. Viewed at: .

Solomon Islands National Statistics Office (2008), "Gross Domestic Product 2003-2006", Statistical Bulletin 16/2008, Honiara.

Soni, N., B. Harries, and B. Zinner-Toa (2007), Responding to the Revenue Consequences of Trade Reforms in the Forum Island Countries, Port Vila, September.

UNCTAD (2007), World Investment Report 2007: Transnational Corporations, Extractive Industries and Development, Geneva.

UNDP (2008a), Human Development Indices: A Statistical Update 2008. Viewed at: .

UNDP (2008b), Human Development Report 2007/08. Viewed at: .

Western and Central Pacific Fisheries Commission (2006), "Solomon Islands", Annual Report, Part I: Information on Fisheries, Research and Statistics, August. Viewed at: SC2-FR-Solomons.pdf.

Western and Central Pacific Fisheries Commission (2008), "Solomon Islands", Annual Report Part I: Information on Fisheries, Research, and Statistics, August. Viewed at: pdf/Solomon Islands Annual Report (Part 1) - SC4.pdf.

World Bank (2006), The Pacific Infrastructure Challenge: A Review of Obstacles and Opportunities for Improving Performance in the Pacific Islands, January. Viewed at: JCJ0NR6UH0.

World Bank (2008), Project Appraisal Document on a Proposed Grant in the Amount of SDR 2.5 Million (US$4.0 Million Equivalent) to Solomon Islands for a Sustainable Energy Project, Report No. 43120-SB, 12 June. Viewed at: .

World Bank (2009), Doing Business 2009: Country Profile for Solomon Islands, Washington, D. C.

WTO (1999), Trade Policy Review: Solomon Islands, Geneva.

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[1] For a detailed analysis of subsistence agriculture in Solomon Islands, see Australian Government and AusAID (2006).

[2] Australian Government and AusAID (2006).

[3] IMF (2004).

[4] International Finance Corporation and The World Bank Group (2005).

[5] Coalition for National Unity and Rural Advancement Government (2008b).

[6] Section 6(1), Commodities Export Marketing Authority Act, Chapter 36 of the Laws of Solomon Islands, 1 July 1985.

[7] Section 11.

[8] Section 6(2), Commodities Export Marketing Authority Act.

[9] 2008 Appropriations Act 2008.

[10] Government of Solomon Islands (2009).

[11] Government of Solomon Islands (2008).

[12] See, for example, Ministry of Development Planning and Aid Coordination (2007), and Australian Government and AusAID (2006).

[13] Australian Government (2004b).

[14] Western and Central Pacific Fisheries Commission (2008).

[15] Section 7, Fisheries Act 1998.

[16] Coalition for National Unity and Rural Advancement Government (2008a).

[17] Ministry of Development Planning and Aid Coordination (2007).

[18] Sections 14 and 16, Fisheries Act 1998.

[19] Section 13(1).

[20] CBSI (2007).

[21] Section 16(8), Fisheries Act 1998.

[22] Section 16(7), Fisheries Act 1998.

[23] Western and Central Pacific Fisheries Commission (2006).

[24] Section 26, Fisheries Act 1998.

[25] Section 29, Fisheries Act 1998.

[26] Campling, Havice, and Ram-Bidesi (2007).

[27] IMF (2008a).

[28] Ministry of Development Planning and Aid Coordination (2007).

[29] Ministry of Development Planning and Aid Coordination (2007).

[30] Chapter 40 of the Laws of Solomon Islands, 1 October 1970.

[31] Coalition for National Unity and Rural Advancement Government (2008b).

[32] Sections 5 and 17, Forest Resources and timber Utilization Act.

[33] Part III, Forest Resources and timber Utilization Act.

[34] Ministry of Development Planning and Aid Coordination (2007).

[35] Chapter 40 of the Laws of Solomon Islands, 1 October 1970.

[36] Coalition for National Unity and Rural Advancement Government (2008b).

[37] Section 19, Forest Resources and Timber Utilization Act, and section 7, Customs and Excise Act.

[38] Central Bank of Solomon Islands online information, "Solomon Islands Round Log Export System". Viewed at: .

[39] IMF (2008a).

[40] Section 8(7).

[41] International Finance Corporation and The World Bank Group (2005).

[42] Australian Solomons Gold Ltd. online information, "Overview" and "Presentation to Solomon Islands Government". Viewed at: .

[43] Coalition for National Unity and Rural Advancement Government (2008b).

[44] Australian Government (2004).

[45] Section 2, Mines and Minerals Act, Chapter 42 of the Laws of Solomon Islands, 1 March 1996.

[46] Section 6, Mines and Minerals Act.

[47] Section 31, Mines and Minerals Act.

[48] Section 50(1), Mines and Minerals Act.

[49] Section 4, Mines and Minerals (Amendment) Act 2008.

[50] Section 36, Mines and Minerals Act.

[51] Section 45(3), Mines and Minerals Act.

[52] Section 47, Mines and Minerals Act.

[53] Section 55(1), Mines and Minerals Act.

[54] Section 60(4), Mines and Minerals Act.

[55] Section 15(1), Income Tax Act.

[56] Unless otherwise indicated, the data contained in this section are from World Bank (2008).

[57] World Bank (2008).

[58] World Bank (2008).

[59] Coalition for National Unity and Rural Advancement Government (2008b).

[60] World Bank (2008).

[61] Section 13(1), Electricity Act, Chapter 128 of the Laws of Solomon Islands, 1 January 1969.

[62] Section 30(1), Electricity Act.

[63] Section 2, The Electricity (Exemptions) Order, 4 December 1992.

[64] Asian Development Bank (2005a).

[65] Section 21, Electricity Act.

[66] WTO Secretariat estimate, on the basis of Comtrade data for Solomon Islands' trading partners.

[67] IMF (2004).

[68] IMF (2004).

[69] Section 3, Protected Industries Act, Chapter 177 of the Laws of Solomon Islands, 29 November 1954.

[70] Section 7, Protected Industries Act.

[71] WTO document GATS/EL/117, 1 April 1996.

[72] This estimate comprises the assets of the Central Bank, commercial banks, Credit Corporation (SI) Ltd, National Provident Fund, insurance companies, and eight credit unions.

[73] IMF (2008b).

[74] CBSI (2007b).

[75] CBSI (2008c).

[76] Flaming and Stuart Mathison (2007).

[77] IMF (2008a).

[78] IMF (2007a).

[79] Section 4, Central Bank of Solomon Islands Act, Chapter 49 of the Laws of Solomon Islands and section 35, Financial Institutions Act 1998.

[80] IMF (2004).

[81] CBSI online information, "Prudential Supervision Policies". Viewed at: index.php?id=6.

[82] CBSI online information, "Prudential Supervision Policies". Viewed at: index.php?id=6.

[83] Section 7, Exchange Control Act, Chapter 51 of the Laws of Solomon Islands, 1 March 1977.

[84] CBSI (undated).

[85] CBSI (undated).

[86] Section 5(5).

[87] Section 13(1), Financial Institutions Act 1998.

[88] Section 62, Credit Unions Act, Chapter 165 of the Laws of Solomon Islands, 5 September 1986, and section 4, The Credit Unions Regulations.

[89] Section 74, Insurance Act, Chapter 82 of the Laws of Solomon Islands, 1 March 1986.

[90] Part III, Insurance Act.

[91] Section 30, Insurance Act.

[92] Section 14.

[93] Section 14, Insurance Act.

[94] Section 11, The Insurance Regulations.

[95] ITU online information, "ICT Statistics". Viewed at: .

[96] World Bank (2006).

[97] Our Telecom online information, "About Us". Viewed at: about_telekom.php.

[98] Section 3, Solomon Islands National Provident Fund Act, 1 January 1976.

[99] Section 7.

[100] Coalition for National Unity and Rural Advancement Government (2008b).

[101] Section 5, Telecommunications Act, Chapter 115 of the Laws of Solomon Islands, 1 January 1972.

[102] Section 5.

[103] Meyrick (2008).

[104] Australian Government (2008).

[105] World Bank (2006).

[106] Sections 9(1) and 11, Ports Act, Chapter 161 of the Laws of Solomon Islands, 4 June 1956.

[107] IMO Convention 48, SOLAS Convention 74, COLREG Convention 72, STCW Convention 78, MARPOL 73/78 (Annex IV), London Convention 72, and CLC Protocol 92. IMO online information, "Status of Conventions by Country". Viewed at: .

[108] Section 10(1), Ports Act.

[109] Australian Government (2004a).

[110] Part XI, Ports Act.

[111] Section 10(2), Shipping Act 1998.

[112] Section 9(1).

[113] Chapter II(8)(i), WTO (1999).

[114] Section 50, Shipping Act 1998.

[115] Meyrick (2008).

[116] Meyrick (2008).

[117] Meyrick (2008).

[118]Um

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[119] Australian Government (2008).

[120] Australian Government (2004b).

[121] See Asian Development Bank (2006).

[122] Coalition for National Unity and Rural Advancement Government (2008a).

[123] Government of Solomon Islands (2008).

[124] Part XI, The Civil Aviation Act 2008.

[125] See Section 37 of the Labour Act, Chapter 73 of the Laws of Solomon Islands, 1 June 1960, and Section 8 of the Immigration Act, Chapter 60 of the Laws of Solomon Islands, 29 September 1978.

[126] Government of Solomon Islands online information, "Work Permit Application & Fees". Viewed at: .

[127] Government of Solomon Islands online information, "Work Permit Application & Fees". Viewed at: .

[128] Government of Solomon Islands (2008).

[129] Ministry of Commerce, Industries, Labour, and Immigration online information, "Residing in Solomon Islands". Viewed at: .

[130] Section 3, Legal Practitioners Act, Chapter 16 of the Laws of Solomon Islands, 11 September 1987.

[131] Section 5.

[132] Section 2, Notaries Public Act, Chapter 22 of the Laws of Solomon Islands, 15 June 1965.

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