papua new guinea s r esponses to written …/media/files/aboutus/action plans... · middle of 2003...

PAPUA NEW GUINEA’S RESPONSES TO WRITTEN QUESTIONS AND

COMMENTS BY MEMBER ECONOMIES AND EXPERT

&

PAPUA NEW GUINEA’S RESPONSE TO REMAINING QUESTIONS

AND ADDITIONAL QUESTIONS RAISED

DURING THE IAP PEER REVIEW

ON2ND MARCH 2005

This updated PNG’s response to the written questions and comments by APEC member economies, experts and ABAC representatives has combined the previous responses appeared in the PNG IAP Study Report as annex 3 and those made after the IAP Peer Review session held in Seoul on 2nd March 2005. The new responses are made to address those questions that remained unanswered in the previous version and also those that were raised during the Review Session. With the additional responses the reply to the questionnaire looked more complete. But this combined version requires you to study it in comparison with its previous version. Additional questions/comments raised at the PNG IAP Peer Review Session were marked up in this combined text.

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INTRODUCTION

APEC Review Team

Q1. Please briefly describe the recent economic developments in the economy with reference to the relevant statistics.

A: The PNG Economy started to grow in 2003 and economic activity has continued to pick up in 2004. Investment has increased, businesses are making profits and employment has risen. It is expected to grow by 2.6 percent in 2004, non-mining and petroleum GDP is expected to grow by 2.8 percent in 2004. Inflation is down to 2% from double figures. Interest rates have sharply fallen; Treasury bill rates have fallen from as high as 20 percent around the middle of 2003 to around 5 percent. The Bank of PNG’s Kina Facility Rate has come down from 14 percent at the start of 2004 to 7 per cent today. Commercial interest rates have also declined, helping ordinary borrowers and reducing the cost for funds for investors. PNG’s external position is very solid in the first quarters of 2004. This reflects high international prices for oil, metals and agricultural commodities as well as increased domestic production in the agriculture, mining and fisheries sectors. Our gross international reserves have reached record levels of more than US$600 million, which makes us less vulnerable to shocks. The Kina remains stable against the US dollar and Australian dollar in 2004 due to sound expenditure control by the Government. Fiscal responsibility has been restored with a considerable improvement in the government’s budgetary position. The deficit in 2003 was less than 1.0 percent of GDP and continued in 2004. The 2004 Budget balance produced a surplus of 1.1 percent. Debt as a percentage of GDP fell from 70% at the end of 2002 to 55% at the end of 2004.

Principal Economic Indicators

2000 2001 2002 2003 2004

Actual Actual Actual Est. Proj.

Real GDP (%) -2.5 - 0.1 - 1.0 2.8 2.6

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Real Non-Mining GDP (%) -2.1 1.9 1.5 1.7 2.8

Inflation (TTY) 10.0 10.3 14.8 8.5∗ 1.5(a)

Non-mining employment (TTY) -0.1 - 5.2 2.9 6.4∗ 2.6(b)

Treasury Bill rate (%) 18.0 12.6 13.3 18.3∗ 9.0∗

Exchange rate (USD/Kina) .3623 .2976 .2573 .2816∗ .3109∗

∗ Actual (a) Actual growth through the year ended September quarter 2004. (b) Actual growth in first half of 2004. Sources: National Statistical Office, IMF and Treasury Department

Papua New Guinea’s economy grew by a higher than expected 2.8 per cent in 2003, following three years of decline. It was driven by strong growth in the mining and petroleum sectors, but also reflected growth of 1.7 per cent in the non-mining economy. This improvement in economic activity continued in 2004. The non-mining economy is estimated to have grown by 2.8 per cent in 2004. With a fall in petroleum production, overall economic growth is estimated to have declined slightly to a still solid 2.6 per cent. Importantly, the Government has laid out a platform for sustaining and building on this solid economic performance. Continued fiscal discipline, sustained reform and political stability should see economic growth progressively increase over the medium to long term. Formal private sector employment continues to recover. Non-mining sector employment increased by 6.4 per cent through the year in 2003 and by a further 2.6 per cent in the first half of 2004. While mining sector employment fell by 0.7 per cent in 2003, it recovered strongly to grow by 9.7 per cent in the first half in 2004. That said, the share of the population formally employed remains low by international standards, reflecting a range of structural impediments to economic activity including law and order problems, land tenure issues and inadequate physical infrastructure. Inflation as measured by Consumer Price Index (CPI) has fallen sharply in 2004. Inflation in the year to the September quarter of 2004 was 1.5 per cent, as compared with rates close to 20 per cent in early 2003. The lower than expected inflation rate for 2004 reflects the prudent management of fiscal and monetary policies by the Government. With lower inflation outcomes, interest rates have fallen sharply in 2004, to be well below their peaks of early 2003. Treasury Bills fell

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below 6 per cent in October 2004. As a result, public sector domestic interest outlays have been substantially below the levels forecast in 2004 Budget, with these savings redirected to increase spending in priority areas. The stability of the exchange rate in 2003 has continued into 2004. In 2004, the Kina appreciated against most major trading partner currencies, including the US and Australian dollars, the British pound sterling and the Japanese yen. The stability of the currency reflects the Government’s sound economic management and increased international prices of key commodity exports. As at the end of September 2004, gross international reserves were over US$550 million, which provides nearly seven months of non-mineral import cover. This is one of the strongest external positions the country has been in since Independence. This level of reserves should provide a good buffer against external shocks and will help to reduce volatility in the exchange rate.

Q2. Please briefly describe the major recent developments in trade and investment of the economy with reference to the relevant statistics as well as the major policy initiatives relating to trade and investment implemented by the economy.

A: The current account recorded a deficit of K57 million in the first nine months of 2004, compared with a surplus of K240 million in the corresponding period of 2003. The deficit in the current account was attributed mainly to a reduction in the surplus in the balance of trade in goods and services more than offsetting a lower net income deficit and higher net transfer receipts. The merchandise trade account recorded a surplus of K2371 million in the first nine months of 2004, compared with a surplus of K2679 million in the same period in 2003, as merchandise imports increased by more than merchandise exports. The value of merchandise exports rose by 0.6 per cent to K5870 million in the first nine months of 2004 from the corresponding period of 2003. The increase was due to higher values of minerals (gold and copper) and some agricultural commodities, such as palm oil, copra, and copra oil, offsetting lower exports by value of cocoa, marine products and coffee. The value of merchandise imports rose by 10.9 per cent to K3499 million in the first nine months of 2004 compared with the corresponding period in 2003. The increase was due to higher values of

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mining and general imports, more than offsetting a decline in petroleum imports. The deficit in services trade was K1965 million in the first nine months of 2004, compared with K1687 million in the same period in 2003, reflecting higher services imports and lower services exports. Services imports rose by 5.3 per cent in the first nine months of 2004 compared with the same period in 2003. Over the same period, service exports fell by 23.5 per cent in the corresponding period of 2003. Overall, the balance of trade on goods and services recorded a surplus of K406 million in the first nine months of 2004, down from a K992 million surplus in the corresponding period in 2003.

Balance of Payments

2003 2004 Change

Jan to

Sep

Jan to

Sep

Current Account Balance 240 - 57 - 297

Balance of Trade in Goods and Services 992 406 - 586

Exports of Goods and Services 6490 6371 - 119

Imports of Goods and Services -5498 - 5965 - 467

Balance of Income -1398 - 1139 259

Balance of Transfers 646 676 30

Capital and Financial Account∗∗∗∗ -227 65 292

Net Errors and Omissions -14 -8 6

∗ Includes changes in official reserves.

Source: BPNG

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Q3. Please provide an overview of Papua New Guinea’s pattern of trade in terms of exports and imports while taking into account commodities traded and the source and destination of trade?

A: Origin of Merchandise Imports

(Sept qtr 2004) 1. Australia K697.2 m (57.3%) 2. United States K92.3 m (7.6%) 3. Singapore K76.0 m (6.25%) 4, Japan K70.4 m (5.8%) 5. New Zealand K38.1 m (3.1%)

Total Imports K1217.4 m Destination of Merchandise Exports

(Sept qtr 2004) 1. Australia K768.9 m (43.9%) 2. Japan K270.8 m (15.5%) 3. Germany K162.8 m (9.3%) 4, South Korea K130.4 m (7.5%) 5. China K62.8 m (3.6%)

Total Exports K1749.9 m

Major Merchandise Exports

(Sept qtr 2004) 1. Gold K 605.2 m (34.6%) 2. Copper K356.8 m (20.4%) 3. Crude Oil K317.7 m (18.1%) 4, Coffee K109.7 m (6.3%) 5. Palm Oil K82.6 m (4.7%) 6. Logs K79.4m (4.5%) 7. Cocoa K42.8 m (2.4%)

Total Exports K1749.9 m

Q4. In 1999, Papua New Guinea announced an Economic Recovery Package that included trade reform as an important component. Please describe the 1999 Economic Recovery Package, the changes that were envisaged in the Economic Recovery Package, progress made to date in implementing the Economic Recovery Package and the end-date for full implementation of the Economic Recovery Package?

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A: The Economic Recovery package announced in 1999 envisaged major reforms in the structure of the economy and institutional arrangements. The main objectives of the reform were: (i) promoting good governance; (ii) sustaining macroeconomic stability; (iii) improving public sector performance; and (iv) removing barriers to investment and trade. Annex X (Structural Reform in Papua New Guinea) describes the objectives and some of the achievements achieved to date. Papua New Guinea has nearly completed the implementation of all the reform packages, with privatization program and improving public sector performance, remaining as the only outstanding activities. There is no specific end-date for the implementation of the reforms because constant changes around the world and international obligations require PNG to make necessary reforms to adapt to these changes. Over the coming years (2005-2007), Papua New Guinea will be advancing its APEC commitments to further liberalize investment and trade, and these are articulated in our policy goals, as per our 2005 Budget.

Q5. Papua New Guinea prepared and released a White Paper on the Tariff Reform Program. Please describe the White Paper’s proposal and objectives, describe the progress made to date in implementing the White Paper and the end-date for full implementation of the White Paper. Please provide a copy of the White Paper.

A: The White paper stems from the Government’s endorsement of the tariff reform program in 1995. The proposed 8-year tariff reduction program (1998-2005) recommended the following: o Introduction of Value Added Tax rate of 10% in January 1998

and the price impact of this will be minimized by reducing tariff rates and replacing provincial sales taxes with a revenue sharing arrangement between the National and Provincial governments:

o Reduce import tariffs on capital equipment and inputs to zero; o Gradually reduce intermediate tariff rates from 40% to 30% in

1998, to 25% in 2000, to 20% in 2002 and down to 15% by 2005; o Reduce protective tariff rate from 55% to 40% in 1998, to 35% in

2000, 30% in 2002, and down to 25% in 2005; o Reduce prohibitive tariff rates to 55% in 1998, to 50% in 2000, to

45% in 2002 and further down to 40% in 2005.

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It was anticipated that the end of the tariff reduction program in 2005, the average nominal tariff rate will have fallen from 21.9% to 6.3% or from 14.3% to 5.3% when weighted against actual imports. The actual implementation of these recommendations commenced in 1999, with the full implementation to be completed by January 2006. In acceding to the WTO in 1996, PNG accepted all the related multilateral agreements and negotiated its own Schedule of Concessions, providing details of the liberalization commitments at the product level. In the case of agricultural goods, the binding coverage for PNG is 100 per cent, the average bound tariff rate is 44.7 per cent, the shares of bound duty lines and tariff peaks (defined as rates at least three times higher than the average) are both 0 (zero) per cent and the share of non ad-valorem rates is 1 per cent. The year of implementation specified in the Schedule is 1996 for most products and others over the period 1996-2000 or 1996-2004. It should also be noted that the Tariff Reform Program (TRP) undertaken in 1999, as part of a reform agenda, is in accordance with WTO and APEC commitments. The trade liberalization under this programme has been substantial for every sector of the economy and has gone far beyond the commitments provided for by the Schedule of Concessions negotiated at the WTO level. As a result, all tariff items are currently below the WTO bound rates. The program provided for three rates of tariff, an immediate reduction in import tariffs, and an announced schedule of reductions over the next decade. Most goods can be imported into PNG duty free. The only goods, which are subject to import tariffs, are goods produced, or which could potentially be produced in PNG.

Rates of import duty under the Current Tariff Reform Program

1999-2000 2001-02 2003-05 2006

Intermediate Rate 30% 25% 20% 15%

Protective Rate 40% 35% 30% 25%

Prohibitive Rate 55% 50% 45% 40%

1. The protective rate is the principal duty rate. Goods in this category include most fish, some vegetables and fruit, coffee and tea.

2. The intermediate rate applies to goods which constitute ‘intermediate goods’ in the production process (that is, other businesses or manufacturing companies utilize them).

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3. The prohibitive rate applies to a limited number of goods only and is designed to act as a major deterrent to certain imports. The prohibitive rate applies to products such as fruit and vegetables, tinned mackerel, cigarettes, veneer and sugar.

OVERVIEW

New Zealand

Q6. Does PNG see efforts to achieve greater economic cooperation between the members of the Pacific Islands Forum, including the framework provided by the Pacific Agreement on Closer Economic Relations (PACER) and the Pacific Island Countries Trade Agreement (PICTA), as complementing and assisting its APEC commitments?

A: Both the Pacific Island Countries Trade Agreement (PICTA) and the Pacific Agreement on Closer Economic Relations (PACER) can generally be considered as having the potential to complement or assist PNG’s APEC commitments. From the outset, there is some degree of emphasis in APEC at the sub-committee on customs Procedures (SCCP) and at the Committee on Trade and Investment (CTI) for economies to explore the possibilities of entering into Regional Trade Agreements (RTAs) or Free Trade Agreements (FTAs) as a means to achieving some of the objectives of APEC. There are some features of both PICTA and PACER such as the PICTA Rules of Origin as one example that provides the opportunity for PNG to engage in and hopefully achieve some of its objectives.

(Additional Questions and Comments Raised at the Peer Review on Papua New Guinea by New Zealand) Q(add).What do you see as the key driving forces of growth in the PNG economy

over the next five years? A. The key driving forces will be to amend the Organic Law on Integrity

of Political Parties and Candidates to ensure political stability and good governance, Strengthen efforts to control fiscal expenditures so

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that resources can re-allocated, Stabilize and strengthen the local currency, Provide investment incentives to attract more foreign investment, Rehabilitate main highways and road infrastructure throughout the country, Reduce domestic and external debt. Increase the tax base and Development of the manufacturing and agricultural industries and others.

APEC Review Team

Q7. As a whole, how far has Papua New Guinea advanced, since 1996, towards the OAA Objectives or the Bogor goals?

A: (To be responded to at later stage)

Q8. Does Papua New Guinea describe its current RTAs? Is Papua New Guinea considering negotiating any other RTAs? If so, has Papua New Guinea commenced or concluded negotiations to develop a RTA? If so, what would be the impact of these RTAs on Papua New Guinea, the signatories of the RTAs and other trading partners?


Q9. How is Papua New Guinea’s membership in the RTA affecting its pattern of trade? Is there any evidence of trade diversion resulting from Papua New Guinea’s membership of preferential RTAs, particularly away from APEC member economies?

A: At this point in time PNG has not entered into any Free Trade Agreements with any APEC member economy.

Q10. Does Papua New Guinea highlight its recent achievements with regard to the implementation of the APEC Trade Facilitation Principles, specifying their benefits and beneficiaries?


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Q11. Does Papua New Guinea highlight specific actions that it has taken or plans to take with respect to the transparency provisions embodied in the menu of options and principles adopted by APEC?


Q12. Please provide an overview of Papua New Guinea’s approach to the new round of WTO negotiations including Papua New Guinea’s offers and areas where it is seeking improved market access?

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(Questions and Comments Raised at the Peer Review on Papua New Guinea by the Discussant -- Peru) Q(add1).It is clear that PNG has made progress in most IAP areas, but there are

still important activities that it has to undertake to facilitate trade and investments as has been mentioned in the questions sent by member economies.

A. We acknowledge the comments made and agree that there are still

important activities that we have to give priority attention to undertake to facilitate trade and investments.

Q(add2).In your progress towards trade and investment liberalization and

facilitation, could you inform us about the most important accomplishments since 1999 and what are the main actions to be taken in the immediate future so PNG get closer to the Bogor Goals?

A. Papua New Guinea is on track to meet its requirements to meeting the

Bogor Goals to liberalise trade and investment. Firstly, the structural Reforms introduced by the PNG Government since the mid 1990’s had made significant progress towards achieving free trade and investment objectives.

The Tariff Reform Program (TRP) that was set into motion in 1994 has led to a significant reduction in levels of Tariffs in PNG. It is envisaged that Tariffs would be reduced further to zero by 2006.

The decision to establish the Independent Consumer and Competition Commission (ICCC) is also one of the significant steps in the right direction. It should be mentioned that, although the Independent Consumer and Competition Commission was only established in 2002,

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it has made a steady progress in regulatory review and deregulation. One of the important achievements resulting from its establishment is that it is effectively enforcing competition laws in a fair and transparent manner.

In the area of liberalizing investment, the Government through the Investment Promotion Authority has done a lot of work in terms of reducing barriers to investment and creating and environment conducive for investors to invest in PNG. One of the key barriers removed is the elimination of the Reserved Activity List in favour of the more open Cottage Business Activities List.

Another important action the Government is taking to eliminate

special arrangements or time factored incentives in favour of transparent tax incentives that would apply equally to all investors by approving a Investment Incentive Guidelines.

RESPECTIVE ISSUE AREAS

APEC Review Team

Q13. Does Papua New Guinea highlight in its Preliminary Plans to Improvements further improvements that it is planning? On reviewing the respective issue areas, please compare the IAPs in 1996 and the most recent year to highlight improvements since 1996. It is also advisable to clarify the plans of future actions in the respective issue areas with timetables and reasons why they are so.

A: Generally, in the updated 2004 IAP and PNG’s responses to questions we provided some trends in improvements made since 1996.

However, in response to this question, provided hereunder is summary some of the specific areas where improvements have been made and plans of future actions.

Tariffs.

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Under the Tariff Reform Program introduced since 1999 tariff rates have been reduced significantly. The following are the specific areas where improvements or changes have been made;

i) Reduced import tariffs on capital equipment and inputs to zero,

ii) Gradually reduced intermediate tariff rates from 40% to 30% in 1998, to 25% in 2000, to 20% in 2002 and down to 15% by 2005,

iii) Reduced protective tariff rate from 55% to 40% in 1998, to 35% in 2000, 30% in 2002, and down to 25% in 2005 and

iv) Reduced prohibitive tariff rates from 55% in 1998, to 50% in 2000,

to 45% in 2002 and further down to 40% in 2005,PNG Government anticipates that at the end of the Tariff Reduction Program in 2006, the average nominal tariff rate will have fallen from 21.9% to 6.3% or from 14.3% to 5.3% when weighted against actual imports.

In the case of agricultural goods, the binding coverage for PNG is 100 per cent, the average bound tariff rate is 44.7 per cent, the shares of bound duty lines and tariff peaks (defined as rates at least three times higher than the average) are both 0 (zero) per cent and the share of non Ad Valorem rates is 1 per cent. The year of implementation specified in the Schedule is 1996 for most products and others over the period 1996-2000 or 1996-2004.

Non Tariff Measures.

In 1996, there were some quantitative import restrictions imposed on Quotas on some imported products including beef and pork. These import restrictions were removed and to-date there are no quota restrictions.

Import licensing is only applied for pharmaceuticals and security goods like firearms or other weapons and still remain in force to date.

In addition, in 1996, PNG had in place an Anti- Dumping legislation. This Act was repealed in 2002 because it was deemed to be inconsistent with WTO Rules.

Service Sector.

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Papua New Guinea has a relatively small services sector, accounting only 28% of domestic economic growth. Since 1996, improvements have been made in some specific areas of this sector.

Currently, Papua New Guinea government is reforming Migration laws and regulations to ensure that foreign investors with investment interest in the country have easy entry access. Any investors with more than K1,000,000.00 investment will be granted Permanent Residency Status so that they can easily move in and out of the country to do their business.

The Government believes that this is an important improvement and change as compared to 1996 where Permanent Residency Status was never considered.

Through this reform, PNG would like to see significant improvement in the development of the Services sector in future.

With regard to the development of tourism services, successive PNG governments have given less priority including the year 1994. However, since 2002, the current Government made decisions to give priority to the development of impact projects in areas of infrastructure and to remove certain impediments including tourist visa fees in this sector.

With respect to legal services, Papua New Guinea requires that a non-citizen Lawyer who practices outside Papua New Guinea and is not resident in the country must apply to the Attorney General for a certificate authorizing that person to appear before the National or Supreme Court. This right is restricted to lawyers practicing in Australia, New Zealand and the United Kingdom.

The certificate requirement was imposed to ensure that foreign lawyers meet minimum standards, including a determination that they are “fit and proper”, before being permitted to practice in Papua New Guinea.

Although Papua New Guinea does not intend to change this requirement, it is considering extending the right beyond Australia, New Zealand and the United Kingdom to permit lawyers from all Commonwealth countries to apply to the Attorney General for a certificate.

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With respect to air services, there no ownership restrictions applied to foreign air carriers. Investment

As part of the overall economic reform, Papua New Guinea Government has taken measures to liberalize its investment measures. The most significant step that has been the elimination of the Reserved Activities List (RAL) and replacing it with the Cottage Business Activities List (CBAL) in October 2004. This change has been made through amending the relevant Regulation that became effective in March 2005.

The Reserved Activities List, which was established in 1992 by Regulations to the Investment Promotion Act, 1992, set out activities that were limited to citizen or national enterprises. A citizen enterprise is an enterprise that is wholly owned by Papua New Guineans. This was deemed to be discriminatory and thus was replaced with the Cottage Business Activities List.

Papua New Guinea has in existence “time-factored incentives” for development purposes. These as “special arrangements” made to promote investment in Papua New Guinea. These “special arrangements” are negotiated through project agreements entered into between the Government of Papua New Guinea and foreign investors that set out the incentives and concessions granted to the investor investing in Papua New Guinea.

In 2005, the Government approved the “Guidelines for Investment Incentives” with a view to removing the application of “Time factored” incentives by the Government on major foreign investment in the country. It is also intended to ensure that any incentives offered by the Government are transparent and easy to administer, not to impair fair competition, avoid distortions and abuse and is consistent with Papua New Guinea’s commitment to the APEC and WTO processes.

Although Papua New Guinea will continue to be bound by negotiated special arrangements for some time, it is envisaged that before 2020 deadline PNG intends to completely do away with the “time-factored incentives” with the view toward an open and transparent investment incentive system.

Standards and Conformance

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Since its establishment by an Act of Parliament in 2003, the National Institute of Standards and Industrial Technology (NISIT) in 2004 has established nine (9) Technical Committees through which NISIT is to develop, adopt and maintain PNG standards.

The Committees comprise of technical experts in the various fields, working on a voluntary basis. These committees are Biological Committee, Chemical Standards Committee, Construction and Building Standards Committee, Electrical Standards Committee, mechanical, Productivity and Performance based Committee, Quality Systems Certification Committee, Testing Laboratory Accreditation Committee and Unit Standards Calibration Committee.

To date, NISIT has formulated, adopted and maintained over 1,000 consensus PNG National Standards that set minimum guidelines for products, processes, and services. Approximately 25 % of these standards are aligned to international standards and 10% are legislated. The foregoing are some of the improvements that NISIT has achieved since its establishment in 1993.

The strategic plan adopted by NISIT calls for an increase in staff levels by five persons per year for the next five years. If fully instituted, it would help address the capacity and manpower needs and in doing so it would not only achieve Papua New Guinea’s policy objectives but more so to meet the Bogor goals by 2020.

Customs Procedures

Papua New Guinea has fully implemented the Harmonized System and work is progressing that will allow Papua New Guinea to adopt the 2007 Harmonized System. Papua New Guinea has also fully implemented an Integrity Code of Conduct that will apply to all officials. Once a Discipline Committee is established within the Internal Revenue Commission (IRC), this process will be completed.

Papua New Guinea is moving towards a paperless trading system. Infrastructure to support the system is currently being installed. A pilot project is in place at Port Moresby and Jacksons International Airport. The Government plans to have the system in place at all ports in the country by July 2005. Access to the paperless trading system would be password protected and users would be given limited access.

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Through these mechanisms, government authorities will be able to protect confidential information.

Papua New Guinea is conducting a review of its existing legislation to determine whether it can be amended to accommodate an appeals process or whether new legislation is required. Regardless of the vehicle, the objective is to establish an Independent Appeals Tribunal to hear appeals on all customs decisions.

Currently, appeals are heard by the Commissioner General of Customs. The Independent Appeal Tribunal would report directly to the Minister of the Treasury.

Papua New Guinea is also reviewing its legislation to prepare for accession to the WCO Instanbul Convention. PNG is at the moment focusing on the temporary entry system and domestic procedures. The Government plans to accede to the Convention in 2005.

Enforcement and the Advance Classification Ruling System are intended to operate primarily on the basis of a risk management system based on profiling. Relying on experience, and intelligence from international partners and organizations such as the Regional Intelligence Office in Beijing, officials hope to identify high- risk imports.

In addition, a determination of whether an importer, or an import, is high risk will depend on the importer’s record (i.e., misclassification or improper declaration of value), the price of the imported goods, the importer, the supplier, the port of origin, the tariff classification and the type of product being imported. Profiling criteria will ultimately be developed for the computer system that is being installed by IRC. Because of restricted infrastructure, officials do not intend to establish a single network for all ports. Rather, each port will operate a stand-alone network with its own database that will be updated regularly.

Papua New Guinea plans to develop a customs website as a means of improving transparency. The website would include all binding rules, procedures, the customs tariff and legislation. PNG hopes that the website will be ready in April or May 2005, and we are seeking technical assistance from donor government and agencies including from APEC through TILF.

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Competition Policy

The only important and significant development that has occurred to date was the launching of the Independent Consumer and Competition Commission’s website on Wednesday the 30th of March, 2005. The website address is www.iccc.gov.pg. In addition, any complaints can be registered on line and attended to immediately by the ICCC officers.

Government Procurement

The Government of Papua New Guinea reviewed its procurement regime in 1996 and has produced a Good Procurement Manual that is currently under review. The Good Procurement Manual incorporates the APEC Non- Binding Principles on Government Procurement and entails transparency, effective competition, fair and ethical dealing and efficiency and effectiveness. In PNG, the procurement process, selection criterias, tender requirements and decisions are made public through public documentations and have the principle to treat potential and existing contractors with equality and fairness.

The Central Supply and Tenders Board (CSTB) is currently working on a website with the view to up loading the procurement information into the website so that the public can have access to information.

In addition, in cases where a contractor wishes to appeal any decisions relating to the procurement process then this can be referred to the CSTB for it to consider.

Dispute Mediation

Papua New Guinea has procedures in place for the mediation of disputes at the state-private and private-private level. Papua New Guinea is yet to become a party to a WTO dispute.

Papua New Guinea applies the arbitration rules set out in the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID) and by the United Nations Commission on International Trade Law (UNCITRAL). Investors may request that disputes be settled under either of these mechanisms.

The domestic courts are a further avenue for dispute settlement and are open to any party raising a complaint against Papua New Guineans

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or against the Papua New Guinea government. Although the courts are available, litigants are encouraged to use Alternative Dispute Resolution (ADR) to address non-contentious matters.

The Papua New Guinea Commercial Dispute Center (PNGCDC) provides ADR. The PNGCDC is a relatively new private sector organization that, thus far, has been involved in eight domestic disputes. Either party to a arbitration can request that the Order issued by the PNGCDC be certified by the Court to make it legally binding and the application must be supported by both parties. Alternatively, either party may appeal a decision by the PNGCDC to the Courts. Papua New Guinea is currently considering bylaws that will accommodate and outline the approach to ADR.

PNG is planning to developing a website soon as a means of ensuring greater transparency. If developed, the website would outline the dispute settlement mechanisms available in Papua New Guinea, including the applicable rules and judgments.

Overall, the dispute mediation system in place in Papua New Guinea is considered to be very advanced and close to achieving the Bogor goals. The dispute mediation processes themselves are based largely on cooperative approaches to dispute settlement

��I. TARIFFS

(Additional Questions and Comments Raised at the Peer Review on Papua New Guinea by Australia, concerning tariff/non-tariff measures) Q(add1).Australia notes that the current treatment of automotive goods is marked

improvement on the prohibitive rates of duty that previously applied to imports of vehicles for private use.

A. Acknowledge Australia’s comments. Q(add2).According to the expert’s study report, the ADB noted that “Corruption

is critical problem, and is publicly acknowledged by government leaders as well as the general public”. In this regard, please elaborate on what Papua New Guinea has done to combat corruption and what specific plans the government of Papua New Guinea has?

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A. Corruption is an issue of international concern and is being experienced in most economies in many different forms. Papua New Guinea is no exception. The government is giving its priority attention to address the problem by strengthening its state institutions such as the Auditor-Generals Office, Ombudsman Commission, Attorney- Generals Office and other relevant institutions.

We have in place the NACA- an Inter- Governmental Alliance Agencies dealing with corruption issues.

As part of its international commitment, Papua New Guinea signed the United Nations Anti Corruption Convention (UNACC) late in 2004. The Convention was ratified by the Parliament during the February session this year- 2005.

We also have a Parliamentary Accounts Committee that deals with misappropriation of public money by public servants and government Office holders.

Hong Kong, China

Q14. We commend Papua New Guinea’s (PNG’s) implementation of the Tariff Reform Program to reduce progressively the nominal tariff rate of 21.9% in 1997 to 6.4% in 2006. We encourage PNG to further reduce its tariffs beyond 2006 as the “prohibited rates” applied to agricultural products will still be as high as 40% by 2006. We also encourage PNG to fill in the Tariff Summary Table and Tariff Dispersion Table in its next IAP.

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�� (The answer to this question has been partially answered in question no. 15 and 17 immediately below.)

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New Zealand

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Q15. New Zealand welcomes PNG’s tariff reform programme, particularly the reduction and/or removal of tariffs for a number of products that are not produced domestically. We encourage PNG to continue this process and note that many tariffs remain at high levels. We appreciate that customs duties have provided an important source of revenue for Government, but this has to be balanced against any trade distorting effects on the overall

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economy. We would be interested to know the current contribution that tariffs make to total revenue collection and how this compares with other APEC economies. As tariffs decline, what alternative forms of revenue collection is the Government pursuing?

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�� The Tariff Reform Program (TRP) which began in 1999 will continue to be implemented up to 2006. Duties of Customs are applied at various rates on imported goods that fall under the following categories:

1. Free

2. Input rate

3. Basic rate

4. Intermediate rate

5. Protective rate

6. Prohibitive rate

By 2006, the rate of import duty for the first three categories will be zero, whilst 15% duty will apply as the intermediate rate, 25% as the protective cover rate and 40% as the prohibitive rate. At the moment, there are no plans to change this regime, even though in 2003, the PNG Government sanctioned a review of the TRP intended to take a holistic economy approach to the impact of the programme on industry, employees and consumers. In 2003, revenue collection from import duties was K504,826,404.28 of the total revenue collected by the PNG Internal Revenue Commission. Up to December 2004, revenue from import duties was K491,751,772.42. These totals consist of collections related to excise duty, General import levy of 2% and 10% GST (VAT) on imports. Import duty alone was K70,215,539.57 in 2003 and K53,992,954.30 in 2004. This amount will continue to decline over the coming years. In view of such reform, the National Government introduced a Value Added Tax regime (Goods & Services Tax as it known today) as a means to compensate for the decline in revenue resulting from the reduction tariffs. This form of tax is currently being implemented in the country. Moreover, it should be mentioned that Customs duties in PNG formed a significant component of government revenue during the 1990s (import duty collections totaled around K398 million in 1998, or 24.9 per cent of total tax revenue). Since the introduction of the Tariff Reform Program in 1999, import duty collections have declined

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considerably. Import duty is expected to make up around 2.5 per cent (K76 million) of total tax revenue in 2005. The revenue loss from the Tariff Reform Program was offset by the introduction in 1999 of the 10 per cent Goods and Services Tax, which treats imported and domestically produced goods neutrally. A levy was also introduced on mining companies to claw back some of the gains they made in the switch from import duties to GST. This levy is being phased out and will finish in 2007. The alternative forms of revenue collections for the Government are very limited, due to the current economic climate. Any increase in tax (profit and loss personal income or goods and services) will have severe impact on the economy. The Government therefore, is concentrating on expenditure control and removing impediments to investment and trade to stimulate economic growth.

United States

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Q16. To be provided at a later date.

APEC Review Team

Q17. Papua New Guinea has indicated its intention to complete tariff reduction by January 2006. Has Papua New Guinea successfully reduced tariffs as per its proposed schedule? What are the current tariff rates? How many reduction steps are remaining?

A: Yes, Papua New Guinea has successfully reduced tariffs as per its proposed schedule. Current tariff rates are:

o Intermediate Rates-at the beginning of the tariff reduction in 1999 the rate was 40%. Currently the rate is 20% and will be reduced to 15% by January 2006.

o Protective Rates- At the beginning of the tariff reduction program in 1999 the rate was 40%. Currently the rate is 25% and will be reduced to 20% by January 2006.

o Prohibitive Rate – At the beginning of the tariff reduction program in 1999 the rate was 55%. Currently the rate is 45% and will be reduced to 40% by January 2006.

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o Exceptional Items- At the beginning of the tariff reduction program the rates ranged from 85% to 100%. Currently, the rates range from 20% to 75%. By January 2006 the rates will range from 15% to 70%.

Currently there is only one reduction step remaining which commences in 2006. There are no reductions beyond 2006 yet.

Q18. How significant are the tariff reductions in the context of achieving the

Bogor goals? Please compare the first tariff summary report provided by the economy with the most recent one.

A: The tariff reduction program undertaken by the Government is on

target to achieve the Bogor Goals. The completion of the 7-year tariff reduction program in 2006 should give PNG an ample time to re-assess its tariffs rates, and the next program after 1996 should see the rates reduced further to achieve the Bogor Goals.

Q19. Does Papua New Guinea intend to further reduce its tariffs, either overall or

on specific products, after the current reduction exercise is completed in January 2006?

A: The intention is there to further reduce the tariff rates after the

completion of the current tariff reduction program in 2006. However, the policy decision to determine the next course of action, either on overall or on specific products will be made after the full assessment of the current tariff reduction program has been made. The outcome of the tariff review in 2003 will also be considered in making recommendations for future tariff reductions, as well PNGs commitments WTO and APEC.

Q20. What initiatives are in place to ensure transparency in Papua New Guinea`s

tariff regime?

A: The separation of responsibilities in policy making and administration of the tariff regime ensures that there is transparency in the implementation of the tariff reduction program.

Under the current arrangement, the Department of Treasury is responsible for determining the tariff policy while the Internal Revenue Commission (Independent Statutory Authority) is responsible for the administration of the tariff regime.

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Any agency, including the Department of Trade and Industry, which is responsible for promoting investment and trade in PNG and abroad, is required seek endorsement/advice from Treasury in instances where investors might request for exemptions or tariff protections. The separation of responsibilities also acts as a “check” on the activities of the responsible agencies in ensuring that the objectives of tariff regime are achieved.

(Additional Questions and Comments Raised at the Peer Review on Papua New Guinea by ABAC New Zealand) Q(add).Without understating the magnitude of the challenges that still lie ahead,

ABAC is of the view that Papua New Guinea has made commendable progress in recent years. This is a tribute to the extent of the structural changes underway and the Government’s determined push to fully implement the programme.

Whether the goals of free and open trade and investment are achieved by 2020 will depend on a continued resolute approach to maintaining the momentum of liberalisation reform. This will require firm and transparent political commitment, adequate funding support, and tackling basic infrastructural and capacity weaknesses that continue to inhibit business and export growth and discourage investment.

The comments below address specific aspects of the IAP Report of particular interest to the regional export business community.

A. Papua New Guinea notes the comments by ABAC- New Zealand

especially on the need for commitments in the areas they have identified if we are to achieve meeting the Bogor Goals by 2020.

Q(add).With regard to the PNG tariff structure, in the past five years under a

deliberate reform process, significant Advances have been made in lowering tariffs and making the regime easier to understand and adhere to, at the cost of declining tariffs revenue, which will be difficult to compensate for. By comparison with many APEC developing economies Papua New Guinea is far from being staunchly protectionist. The notable exceptions are imported salt and sugar.

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The few non- tariff measures appear WTO consistent, and apart from teak – there are no constraints on exports. The Papua New Guinea authorities should be encouraged to remain on track with their reform schedule

A. PNG acknowledges the comments on the advances we have made on

the tariff reforms. We would like to reaffirm that the government is totally committed to the 1999 Tariff Reform Program until 2006.

(Questions and Comments Raised at the Peer Review on Papua New Guinea by the Discussant -- Peru) Q(add1).It is commendable the implementation of the Tariff Reform Program

(TRP) of 1999. In this regard, it would be useful to learn about the number of tariff lines and what percentage of the total tariff lines are subject to the intermediate (15% by 2006), Protective (25%), Prohibitive (40%) and Exceptional (85-100%) rates. What percentage of PNG’s imports fall in each one of these rates?

A. The number of tariff lines and percentage of total tariff lines are as

follows: Intermediate rate 15% as of I January 2006 – 487 lines (8.85%

of the total tariff lines), Protective Rate 25% as of 1 January 2006 – 689 lines (11.07% of

the total tariff lines), Prohibitive rate 40% as of 1 January 2006 - 75 lines (1.36% of

the total tariff lines), Exceptional items 70-100% as 1 January 2006 – 14 lines (0.25%

of the total tariff lines) and Specific rates as of 1 January 2006 – 15 Lines (0.98% of the total

tariff lines).

Q(add2).Since PNG intends to continue with its tariffs reform, authorities may want to consider not only further reduction on the rates applied, but also reclassify items among the different existing categories, some of them have been mentioned already. Furthermore, you may consider reducing the number of categories, since some of them already have 0% tariff (Free, Input rate and Basic rate), or to set a different way for setting categories based suitable criteria to promote growth.

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A. We have taken note of the suggestions and will consider them as options that can be recommended to the Government for consideration in future.

Q(add3).Another aspect that can be of interest is to learn if there have been

studies and/or evaluations of the effects of the Tariff reform and for that matter, of the other reform PNG has undertaken and reported in this IAP Peer Review. Can you please brief us on these matters?

A. The Tariff Reform Program is still in effect until 2006. It is only before or after 2006 that the Government can decide on studies or evaluations of the effect of the reform can be commissioned by the Government to be undertaken. This also applies to other reforms we have referred to in our IAP.

II. NON-TARIFF MEASURES (NTMs)

New Zealand

Q21. How does PNG see the Regional Trade Facilitation Programme that has been agreed by Pacific Island Forum members, with its focus on strengthening quarantine, Customs cooperation and standards and conformance, as contributing to PNG’s APEC commitments regarding non-tariff measures and other objectives?

A: The Regional Trade Facilitation Programme (RTFP) under PACER is an important development for Forum Island Countries particularly in providing assistance to members in enhancing the development of their institutional capacities in specific areas of responsibilities for agencies like Customs and Quarantine. In the Customs area, a revised Work Programme for the Key Focus Area of Trade Faclilitation/Revenue Collection was adopted in Madang in March 2004 at the Oceania Customs Organization (OCO) Conference which prioritizes some of the work to be undertaken. This is due mainly to the overall revised funding for the programme under PACER. There is certainly some synergy in the work currently being done

under the Regional Trade Facilitation Program and that being done at the APEC Sub Committee on Customs Procedures (SCCP) particularly

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in areas such as Customs Modernization through the Revised Kyoto convention, adoption of the WTO Valuation Agreement, the WTO Rulels of Origin and the harmonized System Convention for the Tariff Classification of Goods. We agree that the RTFP is also contributing to realizing some of our APEC commitments.

Hong Kong, China

Q22. We note that PNG applies strict quarantine regulations on fruit, vegetables

and animal and related products. Suggest that PNG should provide more information on such quarantine regulations in its IAP.

United States


APEC Review Team

Q24. In comparison with the NTMs reported in 1996, to what extent has Papua New Guinea progressively reduced NTMs? What NTMs have been removed and what new ones, if any, have been introduced? How significant are they in the context of achieving the Bogor goals?

Q25. Papua New Guinea has noted that imports face few formal trade barriers

other than strict quarantine regulations that affect imports of fruit, vegetables and animals and related products. Are these quarantine regulations the only formal trade barriers that affect imports? Could you please describe the quarantine regulations that are in place? How are these quarantine regulations consistent with the obligations in the WTO Agreement on Sanitary and Phytosanitary Measures?

A:

��Quarantine Regulations are not the only formal trade barriers that affect imports. There are other regulations such as environment and conservation regulations under the CITES Agreement and related issues etc.

��Quarantine regulations in place can be referred to from the circular # 5 on the diary products import conditions given to the APEC

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Review Team on the day the consultation meeting was conducted and the “General Conditions for Import of Animal Products” including the general conditions for import of plant and plant products. However, generally import regulations are drawn based on the pest and disease status or risks associated with the importation of plants and animals or products thereof. Pest and Disease status differ from country to country and therefore import conditions do differ. Upon meeting these conditions, a country with whom trade is negotiated and conducted can export to PNG.

��The WTO Agreement on SPM revolves around Import Risk

Analysis (IRA) or Plant Risk Analysis (PRA) in which case, any restrictions imposed on imports or exports of agricultural produce or products etc. by a particular country must be scientifically justified and must be transparent in nature. PNG National Agriculture quarantine Inspection Authority which administers or takes carriage of such matters and most importantly when applied in the PNG context therefore ensures that it is consistent with the WTO Obligations as practiced worldwide.

The usual practice carried out by the National Quarantine Inspection Authority (NAQIA) in PNG is based on Import Risk Analysis (IRA) or Plant Risk Analysis (PRA) in which the risk is examined and condition negotiated between the trading partners to meet before trading occurs.

Q26. Papua New Guinea has referred to harvesting limits applied to fish. Could

you please describe these harvesting limits and how they are applied? A: (To be responded to at later stage) Q27. Papua New Guinea has referred to quantitative or price controls on log

exports. Could you please describe the export control measures imposed on logs?

III. SERVICES Australia

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Chapter 3(a)1: Business Services — Legal

Q28. Australia notes that a barrister or solicitor who is a non-citizen and practises as a barrister or solicitor outside PNG and is not ordinarily residing in PNG must apply to the Attorney-General for a certificate authorising him/her to appear in a case before the national or Supreme Court and, before making such application, he/she must be admitted to practise in PNG and hold a current practising certificate issued by the PNG Law Society. Australia requests clarification on what purpose the Attorney-General’s certificate serves as the pre-requisite for such a certificate, ie current practising certificate from the PNG Law Society, appears to provide a right to appear before PNG courts?

A: The rationale for the provision is to protect the interests of Papua New

Guinean and resident lawyers in cases before the National and Supreme Courts. However where it is believed that lawyers with the relevant expertise/experience in certain cases are not in the country or are available, the Attorney-General would be asked to provide a certificate permitting the engagement of lawyers from overseas who had the necessary expertise/experience.

(Additional Questions and Comments Raised at the Peer Review on Papua New Guinea by ABAC New Zealand) Q(add1).Without understating the magnitude of the challenges that still lie ahead,




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A. Papua New Guinea notes the comments by ABAC- New Zealand especially on the need for commitments in the areas they have identified if we are to achieve meeting the Bogor Goals by 2020.

Q(add2).From the external perspective, the potential attraction of the Papua New

Guinea services sector would be improved by easing the existing visa and immigration rules; and by reducing the number of commercial activities restricted to Papua New Guinea ownership.

Acceleration of the programme of privatisation of state-owned enterprise and measures to facilitate foreign investment is highly recommended.

A. PNG acknowledges the need to make the service sector attractive. We

also recognize the potential of this sector contributing to the economic growth of the economy. In this regard, the government is taking appropriate actions including the easing of existing visa and migration rules by reviewing the Migration Laws.

The government has replaced the Reserved Activities List (RAL) with Cottage Business Activities List (CBAL) thus reducing the number of commercial activities restricted to PNG ownership.

The privatization program of State Owned Enterprises is still in force.

Chapter 3(a)5: Other Professional; Services

Q29. Australia encourages the examination of further improvements on the restrictions to trade in professional services.

We would like to draw attention to the importance of reducing barriers in the professional services sector such as:

• long-term res idency requirements before being able to practice a profession in a host country,

• limited areas of practice (such as in the legal field only being able to provide advice as a "consultant" or in relation to the country in which they are qualified) or

• the restrictions on any repatriation of profits etc. A. PNG wishes to acknowledge the comments by Australia relating

specifically to restrictions to trade in professional services, reducing

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barriers in the professional services and also on restriction on repatriation of profits.

Some issues on long-term residency status have been highlighted in Q33 and Q34 of the IAP Peer Review Report. As alluded to in Q33 & 34 of the IAP Peer Review Report PNG is considering according long term residency status to Foreigners. This would also apply to foreigners who are engaged in professional Services in PNG on a long term employment/business arrangements.

To add further, the reforms of Immigration laws of PNG, which will be implemented, soon will address the issue of Long Term Residency status of foreigners who are actively engaged in either long term business or long term employment in PNG.

With regard to consultancy, PNG is one of the economies that has engaged services of many foreign consultants in various capacities/areas on many occasions since PNG gaining independence in 1975 under various development cooperation arrangements with other countries and international agencies.

PNG would continue to engage services of consultants in areas where it does not have the expertise in future.

With regards to professional services, the contending issue is one of

reaching or arriving at Mutual Recognition of Professional Standards. For instance, if Australia is serious about this issue it should open up its professional services to Papua New Guineans then Papua New Guinea would reciprocate this treatment.

Currently PNG Lawyers or Accountants are not accorded recognition within the Australian economy even though their training or qualifications attained are almost equal to that of Australians. This is the point of contention. Unless Mutual Recognition Agreement of Professional Standards are in place to facilitate the recognition of qualifications of nationals/citizens between PNG and Australia it will be difficult to open up the professional services sector for some time yet.

With regard to any restriction of repatriation of profits, PNG wishes to

place on record that since the beginning of 1976, The policy on repatriation of profits has been liberal, taking into account the interests of both domestic and external clients.

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Exchange controls were liberalized in November 1992 and as a result, most transactions, other than those related to forestry, mineral and petroleum companies can be effected through a commercial bank in PNG.

As a result, all current payments overseas are normally approved and repatriation of Capital owned by or due to NON RESIDENTS is normally approved. This also applies to the surplus earnings of non residents temporarily working in PNG, and emigrants capital.

Chapter 3(e): Education Services

Q30. We note positively the encouragement of partnership in the supply of services between foreign and national bodies.

Q31. Can you please elaborate on what each acronym means throughout the

Education Sub-Chapter?

A: Please find the full names of all the acronyms that have been provided in the Education sub-Chapter:

o GES-General Education Services o OHE-Office of Higher Education o OLA-Office of Library & Archives o DLE-Department of Labour & Employment o DTI-Department of Trade & Industry o DOE-Department of Education o DFA-Department of Foreign Affairs o PNG-Papua New Guinea o TSC-Teaching Services Commission o NTC-National Training Council o NATTB-National Apprentice Trade & Testing Board

Q32. Under Operational Requirements/Improvements Implemented Since Last IAP can you please clarify the context of the following statement regarding the number of positions “The approved number of positions for the Ministry of Education, Research Science and Technology 34 643 including teachers. This includes 683 positions for the GES, 21 positions for TSC, 45 positions for OLA and 48 positions for OHE. Its own approved Parliamentary Act governs each sector.” (Eg, what positions are these?)

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A: (To be responded to at later stage) Q33. Regarding Current Entry Requirements, what are the entry regulations

governed by the Department of Foreign Affairs and, do these requirements apply equally to domestic and foreign businesses/education suppliers? (Is there an information source explaining these requirements, eg. Website?)

A: (To be responded to at later stage) Q34. Under Foreign Entry/Current Entry Requirements what is meant by “to

succeed a foreigner in specific time frame eg, 10 years.” (Additional Questions and Comments Raised at the Peer Review on Papua New Guinea by Australia) Education Services Q(add).We note that answers on education services will be provided to at a later

stage and we look forward to receiving them. A. The encouragement of partnership in the supply of goods and services

between foreign and national bodies is still an ongoing activity so long as those goods and services are suitable and appropriate for Papua New Guinea. The supply of extra or supplementary educational goods or materials for teaching and learning is an activity carried out by both foreign owned and nationally owned business houses. Schools and their Boards of Management themselves can buy these extra learning materials if they wish and have the money to buy them.

But the prescribed teaching and learning curriculum materials by an activity not open for foreign or national companies to engage in the writing of the content. However the printing of curriculum materials are contracted to reliable foreign and nationally owned companies through public tender under the Central Supply and Tenders Board (CSTB).

In terms of special equipments and machines required for use in teaching/learning such as science laboratory equipments, and equipments for technical colleges and vocational centres are purchased from private suppliers in the country or abroad. Individual institutions/schools buy these equipments with their own money or by using government grants/subsidy given to them.

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With regards to import of educational materials/goods they will be subject to customs clearance, which is the responsibility of the Internal Revenue Commission (IRC) under the Ministry of Finance and Treasury. Depending on how effective the customs agents are and if their documents are in order the clearance of the goods will take a day, if not the clearance of the goods will take a long time.

All schools/institutions buying goods/materials for their use are exempted from paying “ duty” or the goods are duty free however, schools/institutions must first apply for exemption from paying duty from the Internal Revenue Commission (IRC).

It should also be noted that documents showing exemption from paying duty will help is the fast processing of clearance of goods by IRC.

New Zealand

Q35. Tourism has become a key source of foreign exchange and development for many APEC economies. We note that this is the first IAP on travel and tourism. Please outline progress achieved in the liberalisation and development of this sector, including inputs and investment from other APEC members?

A: On Tourism Services, the PNG Tourism Services has to date completed reviewing the Government’s Tourism Policy. The review took into account appropriate incentives and tax allowances to be submitted to the Government for approval. The Tourism Authority’s effort to promote and market PNG as a desired tourist destination ahs made some significant progress. In this context, National Government, amongst other, requested the PNG Tourism Authority and the Department of Foreign Affairs to submit a formal joint submission for the REMOVAL OF TOURIST VISAS. In addition, the PNG Tourism Promotion Authority requested the government to undertake four things:

a) to increase government funding

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b) provide tax incentives for tourism activities c) to review and amend the existing TPA Act d) to support institutional strengthening and collaborative

efforts As a result, the Government this year responded favourably to the PNG Tourism Authority’s initiative in refocusing its attention towards achieving its corporate objectives through a number of structural changes including: the Development and Implementation of 2004-2008 Corporate Plan, Development of a destination Marketing Plan, and Organizational Restructuring in line with strategic response to improve its competitive strength in the regional tourism market.

Japan

Q36. State owned monopolies exist in the telecommunications, postal and power sectors. Due to the lack of competition in these areas there have been no improvements in prices, services or products. What are your long term policies regarding state owned monopolies?

A: The Independent Consumer & Competition Commission (ICCC) is the Licensing Authority that handles to some extent issues relating to monopoly in the Telecommunications sector in PNG.

At this juncture, the ICCC has granted Telikom PNG limited licences to provide Fixed, Mobile and Value Added Services for fifteen (15) years from July 2002. The issue of monopoly on these services is determined by a ten (10) year Regulatory Contract issued by the ICCC in July 2002. This contract regulates the period of exclusivity for various services. However, the PNG Government plans to partially sell Telikom PNG at which time the contract will be reviewed. Note that the Papua New Guinea Telecommunications Authority (PANGTEL) only administers the technical aspects of the telecommunications industry or sector in PNG.

United States

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Q37. Healthcare. To be provided at a later date.

Q38. Communication Services: Audio Visual. To be provided at a later date.

Q39. Education. To be provided at a later date.

Q40. Education. In the interest of greater transparency, it would be helpful if Papua New Guinea could further explain the roles of the DTI, the DLE and the DOE as well as any interrelationships. For example, how would the process differ for an individual trainer wishing to offer his/her services in the Papua New Guinea market and an institution of higher education wishing to be granted “permitted school status”? It appears that providers would need to deal with multiple Papua New Guinea government agencies, and the whole process is unclear. (Do they have a web link they could provide that describes the process?)

A. The Department of Education (DoE)is the executive and inspectorial

branch of the National Education System. It acts as;

a) The education agency for the State for State agency national institutions,

b) Responsible for carrying out and supervision of functions and

responsibilities of the state in the National Education System under the Education Act and any other law relating to education matters,

c) Responsible for the supervision of its implementation and, as

appropriate, the implementation of approved plans and policies in relation to education

d) Responsible for the disbursement in accordance with law, and the

supervision of the expenditure of money lawfully available for the purpose of the Education Act and of any other law relating to education matters.

The Department of Trade and Industry (DTI) and Department of Labour and employment (DLE) operate under their own Acts/laws including carrying out their main roles/responsibilities. These departments should be able to explain their roles and responsibilities if contacted.

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However, relating to the issue of entering the PNG Education market in terms of granting permitted school status in the General Education sector, interested operators should enter into partnership with a national. That interested person needs to sort out their business entry visa with Immigration Division with support from their partner in Papua New Guinea.

After setting up the school with all necessary facilities looking acceptable for a school they can apply to the DOE for a permitted school status.

The process for considering and granting permitted school status may take one month as request will be put through a committee and then an inspection team will be approved to inspect the school and report back to the committee after which a final decision will be made for granting permitted school status.

A person who wishes to operate (foreign owned) a training institution (for specialist training/trade training) that person must apply first to the Investment Promotion Authority (IPA) to register a business. Then they must apply to Foreign Affairs for their business entry visa.

They should also apply to the Department of Labour and Employment for work permit. They should also apply for registration as a training provider under the National Training Council (NTC) in the Ministry of Labour and Employment from which they can be given a National Training Council registration number to operate as a training provider in Papua New Guinea.

There is now a “One Stop Shop” office for immigration and work permit applications located in the same building called Moale Haus in Waigani. Contact with these offices should be through the avenues indicated above or through any agent in Papua New Guinea or overseas.

Q41. Environmental Services. Papua New Guinea has made no commitments in environmental services, nor has it thus far made an offer in the Doha Round. With its natural resource based economy, wouldn’t an opening in certain environmental services sector help (e.g. landscape protection and biodiversity)?

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A: With regards to Environment Services, the following must be noted: o Environment management consultancies does exist but in a very

small way, particularly in major natural resource infrastructure developments. And such consultancies arrangements have always been open to any interested party whether foreign or national.

o On landscape protection, the services in landscape activities are very limited as the demand for such activity is small. Thus opportunities abound in this sector and there are always openings for any interested party whether foreign or national to undertake activities in this regards.

o The same also applies to biodiversity. o On biodiversity sector, these are limited in terms of market

opportunities.

Q42. In Papua New Guinea, 28 percent of domestic economic growth is generated by services. This is relatively low by developing country standards. We would encourage Papua New Guinea to consider further opening in this sector to boost economic growth.

A: Indeed PNG has a very small services sector and the 28 per cent outlined above reflects this scenario. On opening up the services sector, note that positive steps have been taken to opening up this sector following the Government’s structural reforms program- the impacts of this structural reform program which suffice it to say has had far reaching consequences, many of which to a certain extent affect the services sector in a positive way. It is envisaged that in the long term and with the positive growth in the economy, such growth will result in the enlargement and further expansion of the services sector in PNG.

Q43. Papua New Guinea has “no change” in every response for this chapter. To what “other services” categories is PNG referring? What is the baseline? In most cases, when an economy lists “no change” it presents last year’s information in the middle column. Papua New Guinea has not provided any additional information.

A: The “no response” in many of the services chapters is attributed to the fact that many of the activities outlined in some of these chapters particularly the activities outlined therein including the scope and the

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magnitude of some of these activities are very small or very limited. In a nutshell it should be noted that PNG therefore has a very small services sector.

APEC Review Team

Q44. In which sectors has Papua New Guinea undergone liberalization which may affect market access, national treatment or most-favored nation (MFN) for foreign service providers. How significant are these changes in the context of achieving the Bogor goals of free and open trade and investment. List those sectors that had total or partial restrictions in 1996 and compare that to the information for the most recent year. Please elaborate on specific areas of interest to other member economies and the business sector.

Q45. Please review Papua New Guinea’s services regime in 1996 and the most recent year vis-à-vis the “Menu of Options for Voluntary Liberalization, Facilitation and Promotion of Economic and Technical Cooperation in Services Trade and Investment” adopted in 2001.


Q46. Papua New Guinea has indicated that the Board of Architects is conducting a review of entry requirements. When does Papua New Guinea envisage complete of this review? Is it anticipated that the review will further liberalize entry to the practice?


Q47. Papua New Guinea has referred to foreign entry requirements for Communications: Express Delivery and Communications: Audio Visual as being established by the Investment Promotion Authority. Please describe the foreign entry requirements established by the Investment Promotion Authority?

A: Papua New Guinea through its foreign investment certification processes administered through the Investment Promotion Authority sets in place ‘mechanism for check’ to ensure that all foreign

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investment activities carried out by foreign enterprises in the country are officially certified and registered to ensure that they are operating within the confines of the established laws of the host country. First and foremost, it’s a legal requirement for all the foreign companies wishing to carry out business activities in PNG to be registered and certified by the Investment promotion Authority. Subsequent operating licenses and permits are issued by respective industry/sector regulating authorities and in this case for telecommunication, PANGTEL is the regulating authority that issues licenses and permits. To date, market entry in this industry is open to all on a non-discriminatory basis implying that both foreign and national participation si encouraged in this sector/ industry.

Q48. Papua New Guinea has indicated that it is undergoing a process to review its laws and regulations respecting telecommunications. Please outline the process for privatization of Telikom PNG?


Q49. Papua New Guinea has indicated that foreign entry requirements concerning the telecommunication sector will be amended. Does Papua New Guinea anticipate that these new requirements will be established and in place prior to privatization of Telikom PNG?


Q50. Papua New Guinea has indicated that there is no discriminatory treatment with respect to education services, but notes that under current entry requirements PNG nationals are given priority and foreign suppliers are only considered if nationals cannot supply. Could you please explain how this practice accords non-discriminatory treatment?

A: The above would be deemed to be non discriminatory in the sense that when a demand for an education service is very high in the country and that the Department of Education cannot supply that particular service then foreign suppliers can enter the market place in order to satisfy the demand. This scenario happened immediately after Independence in 1975 when PNG was short of teachers it immediately

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recruited teachers from the Philippines to offset teacher shortages it experienced during that time. We should like to add that in specialized technical areas such as the teaching of science related subjects n national high schools and universities in PNG, teachers are recruited in an open and transparent way whereby positions are advertised in which applicants are appointed/ selected on merits regardless of their nationality. PNG national high schools, other higher institutions of learning and especially universities have a lot of foreign nationals inclusive of nationals who have taken up teaching positions on the basis of their merits or academic qualifications. Given the above, it goes without saying that PNG does not discriminate on any foreign citizen in this regards.

Q51. Papua New Guinea has indicated that the licensing and qualification requirements for Maritime Transport may be changed. Please describe the proposed changes to licensing and qualification requirements? Please describe the process and timing for these proposed changes?

A. An application for granting of Coasting Trade License shall be made to

the Department of Transport which will contain details as follows;

(1) Ship in respect of which application is made, (2) The proposed shipping service to be provided, (3) Any proposals for the employment and training of persons, (4) The evidence of ownerships of the vessel, and (5) The declaration of qualifications and ownerships of the ship.

This application is submitted to the Department for compiling in preparation for the Coating Trade Committee meeting to deliberate on whether or not to issue the license.

The Coasting Trade Committee is set up under the Merchant Shipping Act Chapter 242, Division 4, who plays the advisory role to the Minister for Transport for the Regulation of Shipping Services on PNG Coast.

The Committee is appointed by the Minister to consider Coasting Trade Applications and make its recommendations to the Minister to approve or disapprove the issuance of licenses.

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When the recommendation is approved by the Minister, the Department then process the License to be issued to Shipowners/Operators to trade on the coast.

There is no plan on any changes to these procedures. However, with the establishment of the National Maritime Safety Authority (NMA) perhaps they may want to do some changes to these procedures.

Q52. Does Papua New Guinea intend to review its regulations that prohibit foreign flag vessels from carrying domestic cargoes within Papua New Guinea?

A. At this stage Papua New Guinea has no plans to amend its regulations

to prohibit foreign flag vessels from carrying domestic cargoes within Papua New Guinea.

The domestic operators are protected by the cabotage provision of the Merchant Shipping Act through restriction in the carriage of goods, services and persons within its inland and coastal waters. It is hoped that through protection of indigenous shipping, a domestic maritime industry will be nurtured into a competitive and dynamic sector.

Q53. Papua New Guinea has indicated that foreign ownership of domestic airlines is limited to no more than 49%. Does Papua New Guinea intend to review these limits?


Q54. Please describe the new oil and gas policies and regulations that are being considered. How would these policies and regulations better achieve Papua New Guinea’s trade liberalization objectives?

IV. INVESTMENT

New Zealand

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Q55. The Somare Government has given a strong priority to foreign investment in PNG’s resource base as a key engine for national development. Please provide an update on the impact of the Government’s long term National Investment Policy and its contribution to APEC’s non-binding Investment Principles.

A: The Government Papua New Guinea has recently developed a long term National Investment Policy which builds on the considerable progress the Government has made to curtail the regulatory and administrative requirement.

The Investment Policy of PNG is aimed at providing transparency, equal treatment and consistency required by the foreign companies, to enable them to make medium term strategic decisions to invest in Papua New Guinea. In this context Papua New Guinea encourages and welcomes Foreign Direct Investment. It has an open and transparent investment environment. The PNG Government in its drive to promote investment has enacted enabling legislations to complement the National Investment Policy (NIP) to create conducive investment environment. Note that some of the undertakings include the implementation of the World Bank Structural Adjustment Program on Privatization of State Owned Enterprise and Market Deregulation of State Owned Enterprises monopolies and Financial Sector Reform, Tariff Reform and the development of a medium term development strategy that is aimed at providing the basic infrastructure.

The Government has also established a Committee on Removing impediments to trade and investment and the committee has identified a number of impediments and currently working towards addressing them in close consultations with the Department of Foreign Affairs & Immigration and other appropriate Governments Agencies

The Government in line with its commitment to the APEC and WTO

obligations will continue to undertake necessary reform to ensure that the liberalization process is progressed and sustained.

The Government upholds the principle of Most Favoured Nation (MFN)

and National Treatment (NT) in promoting and facilitating foreign investment in the country. The Government accords equal treatment to

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investors of all origins and it upholds WTO Goods Agreement in Services (GATS) provision on the four modes of service delivery by foreign investors.

The Government encourages foreign investment in the resources sectors, hence provides a range of attractive/specific and compatible incentives as well as creating the investment environment conducive to foreign investment. The National Investment Policy is a long-term policy that guides the manner in which foreign investment is promoted and facilitated in the country by respective agencies. It is a comprehensive policy that complies with the country’s international obligations and requirements such as on APEC and WTO as well as addressing its own development needs through the involvement of foreign investment. The National Investment Policy’s contribution to the APEC Non-Binding Investment Principle is reflected in the fact that, the NIP is compliant with the requirements of APEC and the implementation of NIP would result in the implementation of the Non-Binding Investment Principles (Refer to Q60).

(Additional Questions and Comments Raised at the Peer Review on Papua New Guinea by New Zealand) Q(add).What measures are being contemplated to further enhance the

attractiveness of PNG as a destination for foreign investment? A. The government plans to consider new investment incentives

particularly in agricultural sector under the Green Revolution Policy, forestry, fisheries, service and non- renewable resources.

The government through the work of the National Working Group on Removing Impediments to Business and Investment in Papua New Guinea intends to harmonise the issuance of work permits and visas and other areas that are identified to be impediments.

United States


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Q57. Papua New Guinea appears to have a fairly strict investment-screening regime. Could Papua New Guinea explain the rationale for this? It would seem that additional foreign investment would be in Papua New Guinea’s interest.

A: (To be responded to at later stage) APEC Review Team Q58. To what extent has Papua New Guinea provided MFN and national

treatment in investment? To what extent does the economy allow for any use of performance requirements that distort or limit the expansion of trade and investment?

A: With the exception of a few business activities that are reserved for

national participation, in line with Governments endeavor to encourage national entrepreneurship, the Reserved Activities List (RAL) was reviewed and most of the reserved activities have been opened for foreign participation. A revised RAL to be known as Cottage Business Activities List, will be available with the Investment Promotion Authority once the relevant amendments are effected by the First Legislative Council. The country generally accords MFN and NT to all investors so long as they meet the basic regulating requirements of entry. There is no performance requirement for foreign investors, except that there are basic foreign exchange requirements that must be observed for foreign exchange stability purposes.

Q59. Please review Papua New Guinea’s investment regime in 1996 and 2004

vis-à-vis the “APEC Non -Binding Investment Principles” adopted in 1994 and the “Menu of Options for Investment Liberalization and Business Facilitation” adopted in 1998.

A: PNG last updated its Investment Regime in 2003 and its approach to

updating its Investment Regime is ‘as and when’ there are changes to existing investment legislation, regulations and polices or events that impact on investment significantly and the economy in general. The same approach is employed in reviewing and updating Menu of Options for Investment Liberalization and Business Facilitation.

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However, for 2004, the review for both will be conducted this year (2005).

Q60. Please describe the National Investment Policy and whether it has been

fully implemented? If the National Investment Policy has not yet been fully implemented, please advise when it is expected that the National Investment Policy will be fully implemented?

A: A National Investment Policy (NIP) is needed in order to provide the

transparency, equal treatment, and consistency required by the private sector to enable it to make medium to long term strategic decisions to invest in Papua New Guinea. The NIP is needed in order to make the investment policy consistent with:

��the Governments overall strategy for development- as set out in

the Medium Term Development Strategy (MTDS) as well as other policy documents;

��the Government on-going commitments to greater participation in the global community through trade liberalization exemplified by PNG’s membership to APEC and WTO.

The objectives of the NIP among others are:

��the creation of a social and economic environment conducive to

private investment; ��the development and maintenance of infrastructure;

��the development of human resources;

��greater clarity and transparency in investment incentives;

��the elimination of regulatory and procedural obstacles to

investment;

��the promotion of Small and Medium enterprises and the involvement of nationals in economic activities; and

��the utilization of natural resources through downstream

processing.

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The NIP policy was indirectly implemented with reference to its objectives. Some components of the objectives have been fully implemented while others require more time for its implementation. Overall, most of the objectives of the NIP are addressed in the governments Medium Term Development Strategy and anticipate that within the tine frame of the MTDS (2004-2009), the objectives that are identified with the MTDS will be fully implemented while others will be implemented by individual organizations depending on the availability of resources.

Q61. Papua New Guinea noted that although it upholds MFN and National

Treatment, it retains exceptions that allow it to safeguard national security, environmental conservation, health protection (plants, animals, humans) and development aspirations as provided for in the WTO and APEC Agreements. Could you please outline the safeguards currently in place and the extent to which these exceptions affect investment? Could you please advise whether Papua New Guinea intends to eliminate, maintain or expand these exceptions and, if so, in what circumstances would these be eliminated, maintained or expanded?

A. PNG does not have any safeguards in place. What is being referred to

here is the protection of some species through export taxes such as crocodile skin, beche- de- mer, sandal wood, unprocessed wood, etc for conservation purposes.

Q62. Papua New Guinea has indicated that it has negotiated, and is negotiating Bilateral Investment Promotion Protection Agreements. Which countries have entered into a Bilateral Investment Promotion Protection Agreement with Papua New Guinea? How many negotiations are currently planned, and with which countries? Could you please provide a copy of a model Bilateral Investment Promotion Protection Agreement?

A: Papua New Guinea has entered into Bilateral Investment Treaties with a few countries that it thinks has the potential of reciprocal benefits. The following are the countries that it currently has IPPA’s with:

Germany, Canada, United Kingdom, Australia, People’s Republic of China, and Malaysia.

Those that are currently under negotiations include the Republic of India, Indonesia, Philippines and Kingdom of Thailand.

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Q63. With respect to performance requirements, Papua New Guinea has indicated that it applies exceptions to WTO TRIMs requirements concerning development, public health and environmental sustainability. Please describe the exceptions currently in place and the extent to which these exceptions affect investment into Papua New Guinea? Could you please advise whether Papua New Guinea intends to eliminate, maintain or expand these exceptions and, if so, in what circumstances would these be eliminated, maintained or expanded?

A. Papua New Guinea’s current exceptions are consistent with GATT

1994 Article 3 on Exceptions of the Agreement on Trade- Related Investment Measures. Exceptions are applicable to companies who undertake to invest in those areas where there is least development. These are usually areas with very poor infrastructure development, poor accessibility to government services and so on. The exception is based on the premise that companies who take such initiative to invest in rural areas will in the long run contribute to the economic growth of the least developed areas of Papua

New Guinea.

To encourage investment in those areas, the Government came up with a number of incentives particularly the ten- year tax holiday for the identified remote areas of Papua New Guinea. Although, the same principle would also be used to consider issues of public health and environmental concerns, this has rarely been utilized. Reviews are currently being undertaken to determine the effectiveness of the special incentives.

The other exception is granted to infant industries. These are investment projects that are a first of its kind in the country and would contribute to national economic development and improve the livelihood of the vast population. The above exceptions are “ time specific” (5- 10 years) and not encouraged to continue for long period of time.

Q64. Papua New Guinea has noted that it has “time factored” incentives in the form of tariffs that benefit some domestic industries. These “time factored” incentives are described as according preferential treatment to the protected domestic industries on a case-by-case basis and that they will be subject to review. Could you please advise whether tariffs are the only form of “time factored” incentives currently in place? Could you please advise whether any other form of “time factored” incentives are foreseen? Could you

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please describe the extent to which Papua New Guinea relies on “time factored” incentives including a description of the domestic industries that benefit from these incentives? Could you please describe the review process applied to these “time factored” incentives and how these reviews are held? Finally, could you please advise whether Papua New Guinea intends to eliminate, maintain or expand these “time factored” incentives and, if so, in what circumstances would these be eliminated, maintained or expanded?








Q(add2).Papua New Guinea has individual but non-discriminatory Investment

Promotion agreements in pace or being negotiated with a number of APEC economies. These form part of a positive programme of investment liberalisation and complement the measures to mitigate the effects of the former reserved list of commercial activities. “Time-factored” incentive schemes with selected foreign investors remain an anomaly. Access to customary land is difficult.

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Papua New Guinea should be encouraged to persevere with its investment liberalisation programme.

A. PNG is committed to its investment liberalization program. We

acknowledge that the concern on the “Time – factored” incentive scheme with selected foreign investors. The recent development is that the government has made a decision to have in place an “Investment Incentive Guidelines” to evaluate investment proposals to assist the government to make decisions on investment incentives to be given to foreign investors with a view to avoiding giving time- factored incentives.

V. STANDARDS AND CONFORMANCE

United States


APEC Review Team

Q66. Are there any problems or other considerations that Papua New Guinea is facing in promoting alignment of its standards with international standards, as well as participation in international standardization activities and MRAs in both regulated and voluntary sectors? If so, please review how the economy is addressing such problems.

A. There is problem experienced by PNG in alignment of its standards to

international standards, hence promoting and participation of these aligned standards to the stakeholders is a major concerned due to the limitation of resources given to institutions (NISIT) that is mandated to take the lead role in promoting and participating in the development of these international standards be it in the development or draft stage.

Regarding the MRAs, PANGTEL, a communication provider and regulator, is currently preparing working on its MRA in the area of telecommunication and radio telecommunication. Also the National

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Institute of Standards and Industrial Technology (NISIT) is currently preparing its documentation to enter into the Asia- Pacific Laboratory Accreditation Cooperation (APLAC) in the area of testing and calibration as this will assist both the regulated and voluntary sector to have confidence on the conformity assessment activities through the MRA process and also helps remove international trade barriers.

In addressing the problem of promotion, the NISIT is embarking on awareness campaign for the regulators and other major stakeholders, in both public and private sector. The campaign will be in either through media press release advertisement and through the NISIT website that is currently being worked on in upgrading its capacity and capability for better accessibility by all stakeholders (public and private sector) and in addressing the resources component NISIT is preparing a restructure of its organizational structure and will be submitting to the Department of Personnel (DPM), agency responsible for approving the structure.

When the structure is approved NISIT will embark to recruit suitable quality scientific technical officer who will be engage in handing of the international standardization and MRA activities. This will foster participation and facilitating of regional and international trade. In addressing the promotion issue NISIT is now taking advantage in advertising its activities in Investment PNG Magazine produced by Investment Promotion Authority (IPA).

(Additional Questions and Comments Raised at the Peer Review on Papua New Guinea by Korea) Q(add1).Could you be more specific on the areas that Papua New Guinea puts its

focus or what priorities when reviewing all the 1400 PNGs’ to conform to international standards through 2005?

A. Response submitted in Seoul before the Peer Review on 2nd March

2005. Q(add2).We applaud Papua New Guinea’s efforts to implement agreements made

at the SCSC. Based on your experience with the implementation of agreements made under APEC, could you propose some improvements to help developing economies better implement decisions made under the

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APEC umbrella? If there had been difficulties, what measures would have made it easier?

A. Response was provided in Seoul before the Peer Review.







Q(add2). With regard to standards and conformance, Papua New Guinea had

identified a worthy list of intentions in of participation in international standards bodies and a readiness to meet their expectations. The ability to do so will be handicapped by significant capacity constraints that the government will need to address. The problem also applies to WTO participation. How much priority PNG will address to this issue?

A. PNG will give priority to these intentions by building the capacity of

NISIT in order for us to participate in international standards bodies. Apart from seeking the assistance of other international partners, the government intends to provide funding through our annual budget allocation process.

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VI. CUSTOMS PROCEDURES

Australia Q67. What is the time frame for reviewing legislation relating appeals

provisions? A. The review of legislation relating to appeals provision is currently

under way and is expected to be complete by 2006 for implementation in 2007.

Q.68. Could PNG please clarify their dispute resolution procedures in relation to

tariff classification? A. From the outset, a party to any dispute with Customs in respect of a

Tariff or Valuation matter may choose to exercise his/her right by either appealing against a decision to the Commissioner of Customs or the Commissioner General in writing in the first instance.

If the appellant is still dissatisfied with the decision of the

Commissioner of Customs or Commissioner General on appeal, he/she may go to the Courts for a determination of the dispute.

There is currently no strict administrative requirement in respect of

appeals to be fulfilled before accessing the judicial system that means that a dispute can also be taken to the courts in the first instance.

Q.69 Does PNG Customs conduct regular consultative meetings with industry? A. Yes. Currently PNG meets with Customs Brokers on a monthly basis

to discuss issues raised by the Brokers on Customs services and also to inform brokers if there is any change in legislation, new policies or procedures. Meetings are also held with the shipping industry and freight forwarders.

Hong Kong, China

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Q.70 On paperless trading, direct trader input will be introduced to enhance paperless trading. We would like to know how it could encourage wider application and gain traders support?

A. Papua New Guinea is currently in the process of migrating from

ASYCUDA 2.7 to ASYCUDA ++. This program is expected to be completed by 2008 by which all major Customs ports in PNG are expected to be online. This is on the assumption that there are no funding problems. ASYCUDA ++ will have direct trader input capabilities that will encourage faster clearance of cargo, cut down time lost by brokers waiting around Customs house for documents lodged and with improved security features and corrupt practices by officials is eliminated.

It will also eliminate the requirement for a greater number of paper documents in the lodgment of entries. Traders will be given a Brokers Module. They can lodge their customs declaration forms electronically and this will encourage fast clearance of cargo. Small Brokers do not have these and thus paper work will be greatly reduced resulting in their costs reduction. Traders have so far great interest in the Asycuda++ Project.

ASYCUDA ++ also has the capabilities for electronic transfer of funds this feature will also cut down time businesses spend with Customs waiting for payment receipts.

Q.71 We would like it know more about the “Pre Clearance System” and how it

could help speed up clearance of goods? A. The current pre-clearance system is a facsimile system that operates

only for airfreight. This is where the exporter faxes customs the copies of airway bills and invoices and the goods declaration is lodged and cleared using the facsimiled documents. Recent amendments to Customs legislation allows for cargo manifests to be lodged three (3) hours in advance for aircrafts and 24 hours for ships.

APEC Review Team Q.72 Please outline Papua New Guinea’s current status in implementing each of

the SCCP CAP items. For those items that are not fully implemented, what is Papua New Guinea’s target completion date?

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A. The status of PNG Customs SCCP CAP items is as follows;

The CAP Items that have been fully implemented are; WTO Valuation Agreement, Implementation of Harmonized System Convention, Development of a compendium of Harmonized Trade Data elements and Integrity. The following CAP Items are yet to be completed and these are; Advance classification ruling system – target completion date December 2006 TRIPS Border Measures – National legislation to be in place by December 2005, Alignment with UN/EDIFACT International Standards for Electronic Commerce/Paperless trading – Target Completion date December 2007, Clear Appeals Provisions – Target completion date December 2006, Risk Management Techniques – Target completion Date December 2006, Guidelines on Express Consignments Clearance – Target completion date December 2006, Customs Business Partnership – Ongoing initiative, Temporary Admission – Target Completion Date December 2006, Public availability of Information on Customs Laws, Regulations, Administrative guidelines and Rulings – Target Completion Date December 200 and Implementation of Revised Kyoto Convention – Target Completion date December 2007.

Papua New Guinea still needs technical assistance to fully complete the remaining CAP items. Some assistance will be coming from Australia under the PNG/Australia ECP program.

Q.73 Papua New Guinea has indicated that a Customs website is being prepared.

When it is expected that the Customs website will be completed and launched?

A. The Customs website is expected to be completed and launched by

December 2005. Q.74 Papua New Guinea has indicated that a new Customs Act has been

introduced. When will the Act be presented to Parliament? When will the Act take effect? Could PNG please provide a copy of the Act?

A. There may have been a misunderstanding. There will not be a new

Customs Act. What was implied was that the current Customs Act is currently being reviewed so that it becomes compliant with the Revised Kyoto Convention on the Simplification and harmonization of Customs

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Procedures. This review is expected to be completed by December 2006 for the amended Customs Act to be in effect by 2007.

Q.75 Papua New Guinea has indicated that legislation implementing the WTO

TRIPS Agreement has been introduced. Could you please advise when this legislation is expected to take effect? If possible could you please provide a copy of this legislation?

A. Papua New Guinea Customs is only responsible for the border

measures under the WTO TRIPS Agreement and the draft legislation is currently being circulated to all members of the PNG National Intellectual Property Rights Committee (NIPRC) for comments. When NIPRC agrees with the draft TRIPS Border Measures the draft bill will be submitted for approval by the government. We anticipate this will be done by this year (2005).







Q(add2).The final comment under (d) regarding capacity limitations applies as

well to the Customs regime, where there are constructive reforms underway;

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for example, to introduce paperless trading, tighten consultative arrangements with the business community, and more fully align with the Kyoto Convention.

A. PNG’s responses to questions in this area are provided in our answers

to Questions 69 and70.

VII. INTELLECTUAL PROPERTY RIGHTS (IPRs)

AUSTRALIA Q76. In addition to the Copyright and Neighbouring Rights Act 2000, does PNG

have a separate "Copyright Act" (as referred to in the IAP), and if so, is it in operation?

A. PNG did have a law on Copyrights in the past. This copyright law was enacted by Parliament in 1978 and became known as the "Copyright Act of 1978 (No. 16 of 1978). Unfortunately, due to widespread opposition fearing great economic loss, particularly from Education Department, the law was never brought into force. The Act was amended in 1978 but remained shelved.

Q77. If so, we would be interested in obtaining a copy of that Act, and suggest

that it would be useful if PNG could make a copy available on their country website so other APEC economies are able to obtain ready access to it.

A. We plan to making copy of the Act available in IPOPNG’s website in

not too distant future.

The Copyright Act of 1978 is not available on the website. We only make available the current Copyright and Neighboring Rights Act 2000. If you are not able to download it then you may purchase a copy from the Investment Promotion Authority (IPA) whose address is:

The Registrar Intellectual Property Office of PNG P O Box 1281 PORT MORESBY National Capital District Papua New Guinea Tel: (657) 321 3900 or 308 4434 (Dir.)

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Fax: (675) 321 5155 Email: [email protected] Q78. Is the Copyright and Neighbouring Rights Act 2000 currently in operation? A. The Copyright and Neighbouring Rights Act 2000 came into force on 1

July 2002 and is currently in operation. (Additional Questions and Comments Raised at the Peer Review on Papua New Guinea by Australia) Q(add).We note that questions on Intellectual Property Rights will be responded to at a later stage. We understand that PNG may have resources issues which could complicate response times but we would be grateful if you could provide an indication of when you might be able to provide these responses. A. All the questions relating to Intellectual Property Rights have been

answered in responses to Questions 76- 88. UNITED STATES Q79. TRIPs Article 41 requires member states to enact enforcement procedures

to permit effective action against any act of infringement of intellectual property rights, including expeditious remedies to prevent infringements and remedies which constitute a deterrent to further infringements. Please describe any recent laws, rules, or decrees that Papua New Guinea has promulgated to comply with this article.

A. The Customs Division of the Internal Revenue Commission of Papua

New Guinea has been taking appropriate measures by reviewing and Amending the Customs Act. The amendment of the Act enabled them to incorporate the provision for Boarder Control Measures expected to be submitted for approval by National Executive Council and for tabling it for Parliament approval. This is to ensure to achieve legislative compliance with minimum standard of protection provide for in the WTO Agreement on TRIPS. It also to ensure that enforcement procedures specified under Article 41 of the TRIPS are made available in our legislation so as to permit effective action against any act of infringement with respect to intellectual property rights as covered by the TRIPS Agreement. The amendment to the Customs Act and Regulation will provide for

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expeditious remedies to prevent in order to deter further infringement. Q80. Article 39.3 of the TRIPs Agreement obliges members, when requiring (as

a condition of approving the marketing pharmaceuticals or agriculture chemical products) the submission of undisclosed test or other data, to protect such data against unfair commercial use and disclosure. Please explain how Papua New Guinea complies with this provision.

A. Papua New Guinea is yet to comply to the above provision for the

reason that it is yet to have in place such laws and regulations. Thus no protection is provided for undisclosed test or other data against unfair commercial use and disclosure.

However, we expect and envisage to adopting new statutes in the very

near future on the repression of unfair competition (including protection of test data under Article 39.3 of the TRIPS Agreement) and protection of layout-designs (topographies) of integrated circuits, to ensure a full compliance with the WTO administered TRIPS Agreement.

In the absence of such statutes in PNG and by way of approval of

Pharmaceutical products into PNG, the National Department of Health has drug Registration system in place to register genetic drugs from foreign manufacturers. This is consistence with Medicines and Cosmetics Act 1999 and Regulations 2002. To facilitate this, local suppliers who represent the foreign pharmaceutical manufacturers are requested to submit product profiles including the following:

• All active ingredients plus other ingredients; • Indications (use of drug); • Contraindications; • Package size and • Dosage form.

Q81. Please let us know when Papua New Guinea plans to accede and fully

implement the WIPO Copyright Treaty and the WIPO Performance Phonograms Treaty.

A. To preserve and protect the rights and interests of the creators both

locally and internationally, it has been our intention to accede to WIPO administered copyright treaties and conventions including Berne and WIPO Performance Phonograms Treaty (WPPT) sometime this year (2005).

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ABAC JAPAN Q82. Papua New Guinea is encouraged to participate in the APEC IPR Service

Centre scheme and to establish a Centre or Centres at the earliest convenience.

A. IPOPNG is very much interested in the APEC IPR Service Centre

scheme and envisages to establishing a Centre in the not too distant future. However, in view of the financial constraints and resources faced by IPOPNG, the office is prevented from setting a time frame on the establishment of an IPR Service Centre within the Office.

Q83. ABAC asks for Papua New Guinea’s adoption and ratification of the WIPO

Digital Treaties (i.e. the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT), and for the enactment of strong laws and enforcement mechanisms to control optical media production to complement civil and criminal measures.

A. Given the Papua New Guineas’s undertaking under Q81, and in order

to comply with our accession international treaties and conventions allows us to preserve and protect the rights and interests of the intellectual creators both locally and internationally. It has been our desire to acceding to WIPO administered copyright treaties and conventions including Berne, WIPO Copyright Treaty (WCT) and WIPO Performance Phonograms Treaty (WPPT) sometime this year (2005) or early 2006.

APEC REVIEW TEAM Q84. Pleases outline the changes since 1996 and the timing for the fully

implementing Papua New Guinea’s Bogor goals. A. The Government of PNG has given its undertaking and is working

towards complying with its obligations under TRIPS Agreement, and this includes the introduction and enactment of appropriate IPR legislation and the establishment of adequate and effective enforcement mechanisms and procedures concerning the administrative, civil, criminal and broader measures.

As a signatory to the WIPO, WTO and APEC, the Government is fully committed to achieving full implementation of the structural reform of

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its IP laws and regulations.

Our objective is to intensify development cooperation among the community of Asia-Pacific economies that will enable us to develop more effectively with regard to human and natural resources of the Asia-Pacific region so as to attain sustainable growth and equitable development in the region, while reducing economic disparities and improving the economic and social well-being of our people. Such efforts will also facilitate the growth of trade and investment in the region as well as within. With regard to Intellectual Property Rights (IPR), we agreed that their proper protection underpins technical innovation as well as for fair competition amongst market oriented economies, thus contributing to sustainable economic development in the region and within. We attempt to take all necessary measures to protect IPR collectively as well as individually. In order to achieve these goals, we have established IP Office and have introduced core IP legislations covering Patents & Industrial Designs Act and Copyright and Neighbouring Rights Act that were approved in July 2000. The relevant laws became operational on 1 July 2002. We expect to have the draft Regulation on Collective Management for its approval sometime during the second half of this year (2005). We also envisage to adopting new statutes in the very near future on the repression of unfair competition (including protection of test data under Article 39.3 of the TRIPS Agreement) and protection of layout-designs (topographies) of integrated circuits, to ensure a full compliance with the WTO administered TRIPS Agreement. We also expect to strengthen cooperative programs within the APEC to be expanded to human resource development (such as education and training and especially improving management and technical skills of the staff dealing with intellectual property and as well as private sector), the development of APEC study centres, cooperation in science and technology (including technology transfer), measures aimed at promoting small and medium scale enterprises and steps to improve economic infrastructure, such as energy, transportation, information. Improvements of our goals through the IAPs, to be revised and improved annually to allow us to take stock of the progress made to date and the challenges that remain in achieving the Bogor Goals.

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Q85. How effectively Papua New Guinea implement the various measures and

procedures that have been recently introduced with a view to providing for expeditious granting of IPRs, and ensuring adequate enforcement against infringement of IPRs?

A. We have undertaken substantial review and amendment of the Trade

Marks Act and Patent and Industrial designs Acts to be compatible with TRIPS standards and to be compatible with international norms and standards. Review and amendment of the Act also incorporates Geographical Indications as well as Well-Known or famous marks.

We also sought technical assistance from other international donor agencies to upgrade and improve the IPOPNG’s automation processing system that has been design for processing of patents, trademarks and industrial designs. The officers will undertake recommended training programs on the operation, maintenance and development of this system.

The enforcement of the amended legislation on Border Control Measures will bring into place new stringent measures against the importation of pirated works and etc. Currently there is neither border control measures nor enforcement mechanisms to police and monitor or control counterfeit/pirated products.

By virtue of our membership to WTO, WIPO and APEC, like all other

member economies, we are now working towards fully complying with its obligations under “The Agreement on Trade Related aspects of Intellectual Property Rights” or commonly known as “TRIPS Agreement”, and this includes the introduction and enactment of appropriate IPR legislations and the establishment of adequate and effective enforcement mechanisms and procedures concerning the administrative, civil, criminal and border measures.

As a signatory to the WTO, WIPO and APEC, it is a requirement that

developing economies such as PNG who are in the process of undertaking structural reform of the intellectual property laws and regulations are entitled to achieve full implementation.

Q86. What plans does Papua New Guinea have to establish enforcement

mechanisms and procedures? A. At present, there is no regulatory provision on the border control

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measures to be implemented at this stage. However, it is intended that Government agencies that will be involved in the administration and implementation of the Border Control Measures in Papua New Guinea.

This will be a coordinated effort principally between the Intellectual

Property Office of PNG, the Customs Bureau of the Internal Revenue Commission, the Police and the Judiciary that should enabled the formation of some kind of task force as Anti-Counterfeit Task Force.

Q87. When does Papua New Guinea envisage implementing its public awareness

program for intellectual property rights? A. IPOPNG has places a strong emphasis on its public awareness and

education program in our work program that was approved for funding in 2004 and beyond. The awareness exercise has been conducted in very small scale throughout the major commercial centres of Papua New Guinea.

The other forms of awareness program and education on IPR had been

conducted by way of dissemination of information through the articles in the media or through in-house printed brochures and also pamphlets printed and provided by Pacific Islands Forum Secretariat. Selected individuals and staff of IP Office also make presentations at national seminars and workshops. The awareness program is also conducted through training programs where line government agencies, NGO’s, Universities and private sector have been annually represented to participate in these programs organised by international donor agencies such WTO, WIPO or APEC to:

(i) Enhance public awareness of the protection and use of IPRs; (ii) Reiterate the significance of utilization of IP information in

establishing national policies; (iii) Create profit and achieve economic development by enabling the

commercial use of IPRs; (iv) Prevent IPR infringement and duplicate investment; and (v) Promote trade and investment by strengthening protection of

prior IPRs. This would make aware the public on the important roles and functions that IP plays in the economic development of a nation.

Q88. Has the Regulation on Collective Management has been approved by

Parliament? If not, what is the anticipated date on which the regulation will

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be approved and enter into effect? Could you please provide a copy of the Regulation.

A. There is a draft copy of the Regulation on Collective Management is

yet to be finalised for approval by the National Executive Council for its implementation. The regulation does not require its approval by National Parliament. We anticipate having approval of the Bill in the second half of this year (2005). The Regulation will become a public document after it is officially gazetted.

(Additional Questions and Comments Raised at the Peer Review on Papua New Guinea by Korea) Q(add).We note Papua New Guinea’s effort in amending domestic laws to

conform to the TRIPS agreement. However, as your IAP states, enforcement would rise as the next issue that has to be addressed in this context. Could you explain your present situation and what would be a proper situation and what would be a proper enforcement mechanism for your economy?

A. Enforcement of Border Measures - PNG Customs is tasked to implement

IPR border measures. Currently PNG Customs does not have the capacity in terms of human skills and infrastructure to effectively and efficiently apply the TRIPS border measures. With a very vast border and limited capacity PNG Customs is looking at applying both administrative and ex officio actions, where administrative actions will apply to all IPR infringing goods and Customs Officers will be allowed to take ex officio action only on health and safety products or goods.

Internal enforcement of IPR infringements is the jurisdiction of the

Royal Papua New Guinea Constabulary (RPNGC) and the Intellectual Property Office Papua New Guinea (IPOPNG)



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Q(add2).IPR measures are becoming increasingly more robust. Effective

enforcement is the challenge. A. We acknowledge that IPR measures are becoming robust and the

challenge is on the effective enforcement. The government intends to give priority to address the enforcement issue.

VIII. COMPETITION POLICY

Australia

(Australia has directed these questions to VIII Competition Policy and X Deregulation)

General policy framework Q89. What competition laws have been introduced under the act governing the

Independent Consumer and Competition Commission (ICCC)? A. The ICCC Act is the competition law of Papua New Guinea. Q90. Is the ICCC a national body? Which sectors is it responsible for regulating? A. The ICCC is an independent government competition regulatory

agency that operates independently from Government. It is indeed a national body.

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The ICCC Act 2002 provides that the primary function of the ICCC is to enhance the welfare of the people of PNG through the promotion of competition, fair trading and protection of consumer interest; and the promotion of economic efficiency in industry structure, and business conduct in the market. As such the ICCC’s regulates the market in PNG which by definition is the whole of PNG and includes the market for goods or services… their substitutes and imports.

Part III of the Act, allows the ICCC to regulate certain goods and services and sectors/industries. Currently, the of economic/industry sectors subject to the ICCC regulation are as follows;

��Telecommunication Industry (Utility Tariff Orders) ��Electricity Industry (Utility Tariff Orders) ��Water & Sewerage Services (Utility Tariff

Orders/Monitoring) ��Postal Services (Utility Tariff Setting/Monitoring) ��Public Motor Vehicle Services (Service Fares Setting/

Monitoring) ��Motor Vehicle Insurance (Tariff Setting/Monitoring) ��Petroleum Industry (Price Monitoring of International

Import Parity Pricing ex-Singapore). Price setting and control on domestic freight rates & wholesale/retail margins.

Reviews of competition policies and/or laws Q91. What reviews of competition policies or competition laws are planned for

the coming year? A. There is no review of competition policies or competition law (the Act)

planned for the immediate future as we have just begun implementing the law. The Commission therefore is concentrating on establishing the necessary processes and procedures for and effective and efficient competition agency. We are also concentrating on an education and awareness program to ensure that the competition law is understood and complied with. There is however, a review being undertaken with respect to the government’s privatization policy on government utility entities to determine whether full privatization or partial privatization would be more appropriate and whether priority should be given to national financial institutions to bid for these entities. Once the government comes clear in terms of policy directives on what should happen, the

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ICCC could see itself in the near future putting in place the appropriate regulatory framework to regulate these State entities.

At the moment State entities are being corporatised and are regulated under regulatory contracts; this includes Telikom PNG, PNG Harbours Limited, Post PNG, Motor Vehicle Insurance Limited, and PNG Power.

Competition institutions (including enforcement agencies) Q92. We note that the ICCC can seek a ruling from the National Court on any

cases of possible breach of the competition laws. How many such cases have been referred to the National Court and in how many of these cases did the court rule that contravention of the law had occurred?

A. In the last two years, the ICCC has and continues to embark on a

series of awareness program as part of its effort in raising the general awareness of the ICCC Act as the new competition law of PNG. To date, in carrying out its functions and responsibilities as provide for under the Act, the ICCC is yet to refer a business(s) and or individual(s) to the courts for contravening the Act.

Recently the ICCC was taken to court by Valkrie No.5 due to its decision declining grant of a general carrier’s license. This case is still pending.

Measures to deal with horizontal restraints Q93. In the past year, how many breaches of laws relating to horizontal

agreements have been detected? A. None. Measures to deal with vertical restraints Q94. In the past year, how many breaches of laws relating to vertical agreements

have been detected? A. None. Other issues addressed by competition policy

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Q95. How many authorizations were granted in the past year? Is there a public register of these?

A. To date there are only two authorizations applications made to the

ICCC. The ICCC had considered these applications and granted authorization in September 2003 and June 2004 respectively.

The ICCC maintains a public registry on Authorizations, Clearances and Undertakings. Information regarding this can be obtained by writing to the ICCC or obtained from the ICCC website (www.iccc.gov.pg).

New Zealand Q96. What recent developments has PNG achieved in the area of competition

policy? Has there been progress with the proposed establishment of a National Competition Council and Competition Commission and associated frameworks and legislations?

A. PNG does have a competition law through the enactment of the

Independent Consumer and Competition Commission Act, 2002.

As part of its effort in raising the general awareness of the ICCC Act, the ICCC in conjunction with the Papua New Guinea Law Society (PNGLS) and the Judiciary, has recently organized a workshop particularly for Judges and lawyers. International competition law experts were invited from the US and Australia to this workshop. The objective of the workshop is for Judges and lawyers in Papua New Guinea to share the experience of the international competition law expert practitioners, and also prepare them for competition law litigations in the future because the ICCC Act is yet to be tested in a court of law in Papua New Guinea.

The Department of Finance and Treasury is responsible for policy formulation on competition issues and the establishment of the ICCC as an independent statutory body is a direct result of a policy directive in this respect.

United States Q97. The Independent Consumer and Competition Commission Act was enacted

in April 2002. Please describe major actions taken to date to implement the Act. For example, we would appreciate receiving information on :

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the structure of the Commission, the number and professional background of the staff, and the Commission’s current top enforcement priorities.

A. The Independent Consumer and Competition Commission Act 2002

was enacted on May 16, 2002 and not April.

The ICCC is made up of professional, competent and committed technical personals with qualifications in law, economics, accounting and business and engineering. The ICCC has a staff ceiling of 52, 46 of which have been filled with 6 vacancies.

The Commission’s top management comprises a full time Commissioner and two Associate Commissioners, one whom is a non-resident Commissioner. All the Commissioners are professionals with extensive experience in the relevant fields.

The three core Divisions of Competitive Markets & Fair Trade, Consumer Protection and Regulatory Affairs and two support Divisions of Finance and Administration, Legal and Secretariat are manned by professionals with experience in their respective fields

The ICCC’s current top enforcement priorities as provided in its 2005 – 2007 Corporate Plan fall into three main priority areas. Theses are as follows:

��Inform all stakeholders about the ICCC Act and the roles

and functions of the Commission. The ICCC considers this as important because the work of the ICCC is new and there are a large number of people across the country that are yet to be informed.

��Achieve compliance with the ICCC Act. There are some

business and individuals that are still ignorant of the ICCC legislation, hence strict enforcement has not been applied; and

��Effective and efficient use of resources to achieve desired

outcomes. This covers human resource capacity strengthening and having the appropriate information technology capacity in place to enhance our core functions.

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For more information on structure of the ICCC, its functions, regulatory reviews, consumer cases, mergers and acquisitions, and other issues please visit the ICCC website at (www.iccc.gov.pg)

Q98. Part VI of the Act prohibits certain anti-competitive market conduct and

practices. Please briefly summaries key actions taken to enforce Part of the Act.

A. Awareness programs; recent one being the workshop for Judges and

lawyers. International competition law experts were invited from the US and Australia to this workshop.

The objective of the workshop is for Judges and lawyers in Papua New Guinea to share the experience of the international competition law expert practitioners, and also prepare them for competition law litigations in the future because the ICCC Act is yet to be tested in a court of law in Papua New Guinea. Other attendees include representatives from businesses, NGOs and the general public; Monitoring of anti-competitive practices in the market through the media, internet, correspondences with businesses, NGOs and review of complaints;

Normally businesses and individuals will submit to the ICCC their queries of anti-competitive business practices that require investigations. (The ICCC can also carry out its own investigations); The ICCC then acknowledges the query(s) whilst invites the business(s) or individual(s) that is the subject of the query to make a response;

The ICCC then undertakes research and analysis of the allegation for compliance or otherwise to Part VI of the Act;

If the ICCC finds that there is a case to pursue, it conducts further investigations otherwise the parties concerned are notified of the outcome of the ICCC.

In carrying out its enforcement functions under the Act, the ICCC is vested with investigative powers. The ICCC has specific information collection powers under Part IX of the ICCC Act (sections 127 -131). The ICCC is able to use these powers in relation to all its functions. However, such powers are usually not needed in relation to

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authorizations or clearance. In any case such powers are potentially onerous on both the ICCC and business and are very sparingly used. These powers relate to summonsing and cross examining witnesses, seeking information generally and entry and search. This needs a warrant from a Magistrate.

Q99. The IAP list four competition institutions and enforcement agencies; please

describe the role of each and the relationship among these institutions. A. The ICCC is the only completion institution in PNG responsible for

implementing and enforcing the competition law of PNG, the ICCC Act 2002.

The Central Agencies Working Group enlisted in the IAP are responsible for coordinating and formulating Government policies among key government agencies to ensure that there is concerted effort in achieving the desired outcomes.

Q100. What steps has the Commission taken to implement the APEC

Transparency Standards on Competition law and Policy?

A. Papua New Guinea’s competition policy and the law are predicated upon foundations of good governance and State institutions that perform with predictability and in a transparent manner without fear or favour.

The ICCC has adopted and continues to maintain a concerted effort by working closely with the government, businesses and the general public by involving them in its decisions making process or reviews of likely decisions to ensure transparency from time to time. This is evident in its reviews of regulated goods and services, reviews of regulated contracts through the process of Issues Papers, among others, where comments are invited from interested parties.

We also encourage conferences and meetings with parties having interest in mergers that come before the Commission.

Q101. The IAP states that authorisations are granted for certain types of conduct

that substantially lessen competition if the public benefit accruing from the conduct out weigh any countervailing anti competitive detriment. Can you describe the type of public benefits considered in this kind of analysis?

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A. The ICCC Act is a competition statute, similar in many ways to other competition statues around the world, but with provisions to cater for the particular circumstances in PNG as a developing economy; therefore public benefit in PNG may not be similar to those of member economies.

The public benefits that the ICCC takes into consideration before granting an authorization include:

��efficiency gains (savings and business cost reductions likely to

be transferred to consumers); ��Employment; ��import replacement ��export enhancement (to complement the government export

driven-driven economic growth strategy) ��tax revenue accruing to government and ��capital investment and others.

This is not an exhaustive list. APEC Review Team

Q102. Please review Papua New Guinea’s competition policy and/or laws the

enforcement thereof in 1996 and the most recent year, taking into account the “APEC Principles to Enhance Competition and Regulatory Reform” adopted in 1999.

A. The ICCC was established in 2002 is the successor in law for all matter

relating to the former Consumer Affairs Council (CAC) and the Price Control Functions of the Department of Treasury. The Department of Treasury was and continues to be the Government agency responsible for competition policy matters.

Q103. Has the ICCC established any codes or rules relating to the conduct of a

regulated industry or entity? If so, please describe the codes or rules adopted and advise whether the Commission intends to adopt any other codes or rules, that those codes or rules would cover and when they would be adopted?

A. The ICCC has established an Electricity Code to regulate the conduct

and operations of a participant in the Electricity Industry. Conducts and operations of the business which are regulated are;

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��Customer Supply and Sale Contracts ��Service Standards – Outlines Minimum Service Standards

the entity must comply with, reporting to the ICCC, recording and monitoring of its compliance to minimum service standards,

��Enquiries, Complaints and Dispute Resolution – customer enquires, customer complaints and dispute resolution,

��Applications and Connections – Applicants information and fees to be charged for connection,

��Disconnections – disconnection, disconnection of different customer categories, illegal use, when not to disconnect, permitted disconnection,

��Reconnection after Disconnection, ��Use of Electricity and Illegal use – defines illegal uses of

electricity and outlines the action the entity can undertake, ��Billing – when bills issued, how bills issued, what is covered

in the bill, meter reading, under charging, over charging, changes in tariff rates,

��Payment – due date for payment, payment difficulties, payment by installments, review of bill, charge for dishonored payments,

��Meters – Testing, repair, cost of repair, results of tests, replacements of meter,

��Emergencies and Safety, and ��Supply Interruptions – Regulated Entity’s right to interrupt,

notice to consumers on interruptions, minimization of interruptions, information on interruption.

Currently, the ICCC is working on an Internet Code which is in its draft form.

The ICCC has yet to develop Codes for the Telecommunications Industry, Harbors Industry, and the Postal Industry. The ICCC is envisaging on developing and introducing Codes for these industries in the future.

The Commission also regulates the industries through the use of Regulatory Contracts. These contracts specify minimum service standards, the price path of the entity and capital expenditure requirements of each entity. The price path of the regulated entity is usually based on and incentive form of regulation (CPI +/- X).

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Q104. Papua New Guinea has referred to a proposed review of the Independent Consumer and Competition Commission by the Central Agencies Working Group. Can Papua New Guinea advise whether a review will be held and, if so, outline the terms of reference of the review? If a review is to be held; can PNG also describe the review process and timing?

A. The PNG economy continues to undergo reviews and reform as part of

the Governments efforts in promoting good governance, improving economic management, improving public sector performance and removing barriers to investment and export growth.

The proposed review by the Central Agencies Working Group is part and partial of this exercise and is targeted at all Government Departments and agencies and not only ICCC. Such review(s) have to be approved by the National Executive Council (NEC) and the terms of reference, the processes and timing of this are recorded as a

NEC decision by the NEC Secretariat of the Department of Prime Minister and National Executive Council.

Recently, the NEC has approved the establishment of the Public Sector Rightsizing Working Group to provide to NEC an appropriate policy, strategy and action plan for an overall review and restructuring of government administration to meet the Government’s fiscal objectives for a reduction and rationalization of budget expenditure.

As part of the Public Sector Rightsizing exercise, the Working Group is undertaking a wide range of consultations and information gathering. And the ICCC is being invited to provide the Working Group information pertaining to its core functions, performance indicators and resource needed to fulfill its core functions.

For more details of the proposed review to be carried out by the Central Agencies Working Group (CAWG), please liaise with the Departments of Finance & Treasury, National Planning and Monitoring and Trade & Industry as mentioned in the IAP report. Q105. Papua New Guinea has noted that structural reforms are needed to

dismantle excessive market power that will impede effective competition. Could you please describe this excessive market power and the structural reforms required? Could you also please outline the processed order by the National Executive and when it is expected that this process will be conducted?

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A. In line with the Structural Adjustment Program, Papua New Guinea has established a comprehensive and appropriate competition policy that sets rules for business behaviour, removes barriers to competitive operations of markets through deregulation/regulation and ensures competition is not undermined by anti- competitive behaviour of some firms. The ICCC was established under this regulatory framework and promotes competition, fair trading and consumer protection.

Part III of the ICCC Act involves regulated entities, regulated goods and services and regulatory contracts. Examples of Regulated entities are; PNG Power Limited, PNG Water Board, PNG Telikom, Post PNG Limited, Motor Vehicles Insurance Limited, PNG Harbors Board (Port Services) and PNG Land Transport Board. These entities have excessive market power in terms of the services that they provide. These entities have regulated contracts with the ICCC which allows for statutory protection to consumers over the services that they provide.







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Q(add2). With regard to Competition Policy, the recent creation of an independent agency, the Independent Consumer and Competition Commission (ICCC), with significant powers to apply competition policy and law, and lift public awareness in this field, is proving to be notable and much needed infrastructural improvement.

In addition, the ICCC has the valuable role of conducting regulatory reviews and identifying candidates for deregulation.

A. PNG acknowledges the comments made. In fact, we have made

substantial progress in the area competition policy within a short period of time.

IX. GOVERNMENT PROCUEMENT Hong Kong, China Q106.We note that PNG has not provided details on its current GP regime in the

2004 IAP. We suggest PNG such information as far as possible. A. The government procurement regime in Papua New Guinea has five

key principles that fundamental in the Government of Papua New Guinea tendering and contracting. The principles are value for money, transparency, effective competition, fair and ethical dealing and efficiency and effectiveness.

Different entities in Papua New Guinea are involved in the Government Procurement and are as follows;

��The Governor – General of Papua New Guinea- In regard to

procurement, the Governor – General executes the contract with a contractor based on the advice of the National Executive Council (NEC).

��National Executive Council- Contracts above delegated limited are referred to the NEC for award. Upon awarding the contract, the NEC will refer it to the Governor- General for the contract to be executed.

��Minister for Finance- The Minister has the overall responsibility for the Government’s procurement. The Minister’s role is to;

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i) Establish Specialised National Supply and Tender Boards under section 39 of the Public Finance Management Act; ii) Remove the delegated authority of any Supply and Tender Board not complying with the requirements specified in the Financial Instructions; iii) Execute variations to an established contract on advice of the Central Supply and Tender Board; iv) Appoint designated officers to approve variations to contracts as regards to time, price or other conditions within such limits as are specified in the Financial Instructions; v) Where the amount of the consideration of a contract or agreement to which the State is party that exceeds K5 million, the Minister shall cause a copy of the contract or agreement to be laid before the first meeting of the Parliament after execution of the contract or agreement; vi) Issue to Supply and Tender Boards binding policy directions in relation to preference to national tenderers and local manufacturers and vii) Present the Annual Report of the CSTB to Parliament by 30th June of the year to which report reports.

��Central Supplies and Tenders Boards (CSTB)- Controls and

regulates;

i) The purchase and disposal of property and stores, ii) The supply of works, goods and services and iii) Recommend to the Minister of Finance, appropriate financial delegations for the Agencies to conduct procurement.

��Tender Evaluation Committee- Carry out the tender evaluation in

accordance with the Public Finance Management Act (PMFA), Regulations and Financial Instructions.

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��Specialised Supply and Tenders Board (SSTB)- Ensures that tenders are within delegated authority and jurisdiction have been conducted in accordance with the PMFA and represent “value for money”. For contract above its delegated authority, the SSTB ensures that the procurement action is referred to CSTB. The SSTB has to provide periodic reports of their activities to CSTB, including details for CSTB’s Report.

��Provincial Supply and Tenders Board- Plays a gatekeeper function for procurement for Province, District and Local Level Administrations. Ensure tender at the Provincial, District and Local Level are conducted in accordance with the PMFA and represent “value for money”.

��Provincial/National Departments and Public Bodies- These agencies identify their need for goods and services, specify what is required, analyse the results and manage established contracts. In case of National Department and Public Bodies, procurement action is referred directly to the CSTB. For Provincial, District and Local Level Administrations, procurement action is first directed to the Provincial Supply and Tenders Board and if the contract estimate is above delegation, the action is subsequently referred to the CSTB.

��Public Officers- All Public Officers involved in the procurement process should ensure that the Government of Papua New Guinea achieves “Value for Money” through fair, competition and efficient processes.

United States Q107. We encourage Papua New Guinea to provide a more comprehensive

explanation of their procurement practices in their IAP. An explanation of legislation that governs their procurement practices, as well as an overview of implementation procedures would be helpful. Presently, there is not adequate information to comment on.

A. Public Finance (Management) Act 1995 (PMFA), Regulation and

Financial Instructions serve as a legislative framework to govern the procurement process in Papua New Guinea. Under the PMFA, the Minister for Finance has the overall responsibility for the Government procurement. Those responsibilities are highlighted in our answer to

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Question 106 and are in accordance with the Public Finances (Management) Act 1995 and the Financial Instructions.

The PMFA was made by the National Parliament and makes provisions for the management of public finances. Part VII of the PMFA covers State Tenders and Contracts in which National Departments, Provincial Departments, District Administration, the Local Level Administration and the Public Bodies has to comply with the sections therein.

APEC Review Team Q108. Please review Papua New Guinea’s government procurement regime in

1996 and the most recent year with the “APEC Non-Binding Principles on Government Procurement” adopted in1999, and highlight the steps taken to improve the consistency with the Non-Binding Principles.

A. The Government of Papua New Guinea reviewed its procurement

regime in 1996 and produced a Good Procurement Manual which is currently under review. The Good Procurement Manual incorporates the APEC Non – Binding Principles on Government Procurement and highlights on transparency, effective competition, fair and ethical dealings and efficiency and effectiveness.

In Papua New Guinea, the procurement process, selection criteria, tender requirement and decisions are made available in public documentations and have the principle to treat potential and existing contractors with equality and fairness. The CSTB is currently working on a website and loading the procurement information into the website which would be made available to the public.

In addition, in cases where a contractor wishes to appeal to any decisions relating to the procurement process if they consider that the process was flawed and unfair, the Central Tenders and Supply Board (CSTB) is the independent body that the appeals have to be directed to.

The CTSB is responsible for the control and regulation of Government procurement and will work in accordance with the PMFA and in conjunction with the Auditor- Generals Office, Finance Inspection Division of the Department of Treasury to check compliance and where con- conformances occur provide advice and direction for corrective action.

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Q(add2).Useful progress has been made in government procurement procedures;

for example, by restructuring the tender boards network. However, further reform should tackle the arrangements that permit the continued use of ministerial waivers and sole source procurements.

A. We agree with the comments on the need to reform the use of the

Ministerial waiver.

IX. DEREGULATION/REGULATORY REVIEW

New Zealand

Q109. We would welcome an update on the Government’s public sector reforms, including progress with the “corporatisation” and privatisation of several agencies. How has this contributed to APEC objectives for Deregulation and Regulatory Review?

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A: In 2000, the PNG Government initiated a process of review of the then pricing and regulatory arrangements relating to public utilities. Although largely directed towards putting in place regulatory reforms that would apply following the proposed privatization of a number of publicly owned utilities in PNG, the reforms went beyond these specific utilities to embrace the whole business sector in PNG.

During the 1990s and certainly since the floating of the PNG currency the Kina, there had been a growing awareness in PNG of the need for some form of competition reform. The price control arrangements that had been put in place in the early 1970s as a temporary arrangement to address the oil price shock of that ear, needed review & reform. Pricing decisions made under these arrangements were not always fully explained or justified. Also the form of price control being applied did not encourage new investment and efficiency improvements that would ultimately benefit wider community through improved service delivery and ultimately more efficient cost reflective prices. In addition, during the 1990s there was a growing recognition of the need for reform of PNG’s competition laws. A process of competition reform had been underway on a world wide basis since the 1980s and it was increasingly recognized that if PNG was to maintain its markets for its major agricultural and mining based exports, it needed to improved the overall efficiency of its domestic economy. Reform of competition laws in PNG was therefore seen as being an integral part of the wider reform of the PNG economy of which the floating of the PNG currency Kina was but one step. Thus within this context of economic reform and a move towards a more efficient and competitive domestic economy, that the Review of the existing Price Control Arrangements and competition policy was undertaken in 2000/01. This subsequently resulted in the enactment of the INDEPENDENT CONSUMER & COMPETITION COMMISSION ACT and the formation of the INDEPENDENT CONSUMER & COMPETITION COMMISSION IN 2002. The functions of the Independent Consumer and Competition Commission include the promotion of competition and fair trading, regulation of prices for certain goods and services and the protection of consumers’ interest and related purposes. The ICCC Act in particular introduces a new regime for regulating prices covering electricity,

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telecommunications, water, ports and harbors, postal and third party motor vehicle insurance. The establishment of the ICCC as an independent body responsible for the administration of the ICCC Act set a new precedent in PNG. Whereas previously the Prices Controller had been given powers under the PRICES Regulation Act to control and set prices and the Price Controller could not operate independently from the Department of Treasury as he was answerable to the Department of Treasury. In addition there was no requirement upon the price controller to explain individual pricing decisions or adopt an agreed, standard assessment procedure when reviewing price claim adjustment claims. Thus, there was a tendency for the Price Controller to reach decisions on prices that the BUSINESS SECTOR in particular could not readily understand or that potentially were inconsistent. Moreover, the impact of the ICCC Legislation is that: ��The Commission is to be independent of the Government

ultimately responsible to the people through the parliament; ��Decisions of the Commission, particularly in relation to pricing

matters are to be transparent and fully explained in public reports prepared and made available by the Commission.

��All members of the community are to have access to the Commission including commenting on the Commission’s draft findings and decisions.

��The Commission is to have regard to the legitimate interests of the suppliers or producers of goods or services subject to price regulation and as well as the interests of users and consumers of those regulated goods and services.

��Prices should reflect efficient cost.

With regard to Deregulation and Regulatory Review both can be considered within the Competition Policy Framework under the auspices of the Independent Consumer & Competition Commission and ICCC Act. Some of the pertinent issues are discussed here below: The ICCC Act has now provided an important mechanism relating to good public policy in PNG. Firstly, PNG now has an Agency within the necessary Legislative power to encourage and promote the emergence of greater competition in the domestic economy.

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Competition will act to ensure that prices paid by consumers reflect the best available price from overseas suppliers or from Domestic producers. When undertaking a review of prices. The Commission is required by legislation to determine whether there is sufficient competition in the relevant market to remove the need for direct price control or price monitoring. In the PNG context, Price Regulation must be seen as being a second best option if there are other ways of freeing up the market to allow competition to determine the best available price. The Commission is “pro competition” and will use its legislative powers to encourage greater competition within PNG. This will not only act as a counterbalance to the automatic pass through of imported cost inflation, but will ultimately contribute to a more efficient and internationally competitive domestic economy. Thus, the Commission now determines prices and adopts price adjustment mechanisms that reflect the efficient costs of providing the services. The Commission is not constrained to accept the automatic pass through of inefficient cost increases. Rather, the Commission is able to review and consider what is an efficient cost base for purposes of setting the price of a declared good or services, and to apply what we refer to as EFFICIENT PRICE ADJUSTMENT MECHANISMS with a built in mechanism to encourage greater operating efficiency. With respect of Deregulation in particular, the Government through a process of privatization has deregulated market in most of the services and utility sectors, which it had monopoly on, through the establishment of the INDEPENDENT PUBLIC BUSINESS CORPORATION (IPBC). The IPBC would serve as a vehicle upon which these state owned enterprises or entities are sold or disposed of. The manner of sale and acquisition of those assets is through transparent public tendering process both domestically and internationally in common print media.

APEC Review Team Q110. Please describe some examples if industry or sector-specific regulatory

reform where reform may eliminate distortions on trade and investment or restrictions on competition.

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A. The Papua New Guinea Government has established a National

Working Group (NWG) on Impediment to Business and Investment in Papua New Guinea Chaired by the Chief Secretary to Government. The National Working Groups role is to assist in facilitating the Government Policy of fostering economic growth through increased exports and an improved business and investment climate.

The NWG comprise of the members from the private sector and key Government Agencies including the Departments of Prime Ministers’ & National Executive Council, Treasury, Planing and Rural Development, Labour & Industrial Relations, Foreign Affairs & Immigration, Investment Promotion Authority and the Internal Revenue Commission.

The role of the NWG is to identify a number of key issues within various Government Department and Agencies that are considered as impediments to business, trade and investment. Once the issues are reported to the NWG, they would be categorised on a priority basis according to their importance and whether the solutions can be implemented in the short, medium or longer term. Some of the issues that the NWG has been engaged in relate to immigration and work permits, employing the Internal Revenue Commission (IRC) Auditors within financial limits set by the Ministry of Treasury, Appropriate Remuneration of Tax Auditors, Capacity Building of IRC, Replacement of the Reserved Activities List (RAL), Regulations on the implementation of the APEC Business Travel Card Scheme and issuance of Permanent Residence Permit, Liberalisation of Immigration laws, Investment Incentive Guidelines and the Establishment and introduction of the One – Stop – Shop concept.

The NWG has also taken on board other areas where there exist impediments. These areas includes the Privatisation of State Owned Enterprises, National Agriculture Quarantine and Inspection Authority, Civil Aviation Authority and Tourism Promotion Authority.

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X. IMPLEMENTATION OF WTO OBLIGATIONS AND RULES OF

ORIGIN

New Zealand

Q111.We welcome recent comments by Trade Minister, Hon Paul Tiensten, for PNG to play a more active and engaged role in the World Trade Organisation, especially in the lead up to the WTO Ministerial Meeting in Hong Kong in 2005. What are PNG’s priorities for the Doha Development Agenda?

A: At this juncture, one if not the most important priorities for PNG in the Doha Development Agenda is to participate actively in the WTO Ministerial Meeting and to build its human and institutional capacity from assistance that is available from the Doha Development Agenda.

APEC Review Team

Q112. To what extent has Papua New Guinea implemented its commitments under

UR/WTO? A. Papua New Guinea is committed towards the WTO process and thus is

making attempts to fulfill its commitments in spite of its limited resources and constraints.

Tariffs

The 1999 Tariff Reform Program once fully implemented by January 2006, with very few exceptions, will have reduced customs duties to zero, 15%, 14%, 25% and a prohibitive duty rate of 40%. Also by 2006, the normal tariff rates will be as low as 6.4% from 22% and the weighted average tariff rate will be 4.7% from 14%. As a result, the Australian Department of Foreign Affairs and Trade has commented that the “ongoing tariff reform has made Papua New Guinea one of the least restrictive trade regions of any developing country.

Non-Tariff Measures

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Papua New Guinea maintains relatively few non-tariff measures. There are no import restrictions, export licenses, or tariff rate quotas. With the exception of a prohibition on exports of teak PNG does not restrict exports of any products. However, there is an export tax on unprocessed logs that is a progressive tax to also address concerns that forest companies were using transfer pricing as a means of avoiding tax liability and also to encourage domestic downstream processing. This is also the same for crocodile skin and sandalwood. There is also some preferential national treatment including access to fishing licenses, but it does not limit access to the Madang processing plant or continue to impose the other restriction on access to its fisheries as reported in 2000. Stringent quarantine regulations have been the only broadest trade barriers in PNG. However, PNG National Quarantine Inspection Authority (NAQIA) has now moved from a zero risk approach to quarantine that had prohibited imports of some products and has now adopted the Import Risk Analysis model applied in the WTO Agreement on SPS. IPR PNG has had legislation in place to register and protect trademarks for at least 25 years and this is being amended to ensure that the legislation is fully consistent with TRIPs obligations and the Madrid Protocol. In 2002, it also extended protection to patents, industrial design and geographical indications (which are treated as trademarks) and has also introduced copyright protection. IPOPNG considers applications to register intellectual property rights from Papua New Guineans and foreign applicants on an equal basis. The regulatory process applied and protection granted is applied equally to Papua New Guinean and foreign applicants. If an application is rejected, the applicant may apply to the Registrar for reconsideration. Decisions by the Registrar may be appealed to the courts.

However, IPOPNG does not have the capacity to enforce intellectual property rights and infrastructure is not sufficient to fulfill border enforcement obligations at all ports. Individual right holders have recourse to the courts to protect their rights and thus self-enforcement

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is the principal means of protecting intellectual property rights in PNG and will likely remain so for some time.

Notifications Notification requirements under each of the WTO agreements have been very poor due to the lack of understanding of the correct method in carrying out the notifications by appropriate officers. It is hoped that a WTO-sponsored seminar on notifications to be held this year for PNG will improve this exercise.

Q113. What measures has the economy taken to ensure the impartial, transparent and neutral preparation and application of rules of origin?

A. The Rules of Origin that PNG applies are WTO-consistent. In the

trade Agreements that PNG has entered into with its trading partners, the rules of origin are negotiated as part and partial of the Agreements and therefore are embodied in the Agreements or annexed to the Agreements.

XI. DISPUTE MEDIATION

APEC Review Team Q114.Please provide an overview of how Papua New Guinea has settled disputes

with other economies with respect to trade and investment, citing a few recent examples.

A. Papua New Guinea in the recent past has not had any disputes with

other APEC economies with respect to trade and investment. Agreements relating to trade and investment with other economies, countries or states, would always contain a provision for the settlement of disputes and the mechanisms to be used in the event of a dispute and because it usually involves sovereign states, diplomatic protocol requires dialogue and consultation at ministerial levels. Thus dialogue and consultation at this level has always led to settlement of disputes. No disputes has proceeded past this stage.

However, within the Melanesian Spearhead group (MSG), it had two

cases. The first was in 2000 when the Solomon Islands alleged that

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PNG was dumping its Arnotts biscuits at a cheaper price in the Solomon Islands market.

Following the provisions set out in the MSG on dispute settlement,

Solomon Islands and PNG went into consultations and the dispute was resolved at the consultation stage and thus did not go further than that.

The second case was with Fiji. Again in 2001, Fijian Quarantine inspectors visited the Papua New Guinea manufacturing Plant outside of Port Moresby that manufactures canned bully beef (Ox & Palm) and among others exports to Fiji. Their assessment was that some of the processing plants did not meet health and hygiene standards. As a result of this, Fiji stopped importing PNG ox and palm until such time when these plants were improved to meet the required sanitary requirements and the Fijian inspectors inspected once again to verify this.

Based on the Fijian report, the PNG Ox & Palm Company proceeded to carry out the required improvements to their processing plants. Fiji delayed this process despite several communications from the PNG Government. Finally, in 2003, the Fijian inspectors returned to Port Moresby and inspected the facilities. Their final verdict is that the company has met the required health and hygiene requirements. Based on the response from Fiji Government, the Papua New Guinea company is now exporting to Fiji but on the condition that no PNG carcass is used for corned beef exports. PNG is expects to settle this issues when the Officials and Ministers meet at the bilateral level.

On the other hand, the State has not invoked the DSU process under the World Trade Organisation (WTO) Rules because as already stated above it has not had any disputes with other economies. Even if it did the State would definitely engage the expertise of persons who have had experience with the DSU process, because of the complexity of the rules and procedures.

Q115. Has Papua New Guinea had any dispute with its trading partners? If so,

how were these resolved? A. Major economic projects of which the State is a party to have always

been established by way of Project Agreements. These Agreements

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provide for the respective rights and obligations of the parties with a clause on arbitration and dispute settlement.

The dispute settlement mechanism found in all Agreements, are the

rules of the United Nations Commission on International Trade Law (UNCITRAL) as administered by the Singapore International Arbitration Centre (SIAC).

The State has in the recent past began utilizing the locally established Papua New Guinea Commercial Dispute Centre (PNGCDC) which administers the UNCITRAL rules.

Although the Agreements provide for dispute settlements, no dispute

have gone as far as dispute settlement or arbitration for the reasons that they have been settled in the first instance they were brought to the fore, with the exception of the “Sandline Affair.”

This was a case where PNG entered into a written contract with

Sandline of England to provide military services, advisers and equipment in PNG. These military service were to be used in an effort to overcome rebel/guerrilla forces operating in the North Solomons Province.

In the course of the performance of the contract there was change of

policy and the partly performed agreement were not paid and so Sandline took its claim for payment to arbitration pursuant to an arbitration/dispute clause providing for the UNCITRAL rules. At the arbitration the Tribunal ruled in favour of Sandline.

XII. MOBILITY OF BUSINESS PEOPLE Australia Q116. Australia welcomes PNG’s participation in the APEC Travel Card scheme

and its efforts in 2004 to put into place the necessary legislation and arrangements, to enable PNG to commence a local operation. Australia is ready to install the system and to provide the training to local staff.

A. We thank Australia for the assistance it is providing for PNG to

participate in this important scheme. It will contribute significantly to facilitate the mobility of APEC business people entering PNG to do

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business and at the same time strengthen our capacity of our Migration authorities in servicing incoming passengers to the country.

Q117. As invited by PNG, Australia will conduct an Advance Passenger

Information (API) Feasibility Study in PNG in 2005. A. PNG Government is looking forward to the outcome of the study and is

committed to assist and facilitate arrangements for those who will conduct the study.

Mexico Q118.(Business Visa Requirement) Which are the requirements for temporary

business entry (other than short-term business visitors) as well as the information on streamlined arrangements, if any, for executive and senior managers on intra-company transfers, as described in the Mobility of Business People OAA guidelines.

A. Papua New Guinea is keen to facilitate access to business people from

APEC member economies.

Under the PNG Immigration Program, a Business (Short Term) Entry Permit may be issued for period of up to twelve (12) months. The Entry Permit allows entry for bona-fide business people for a period up to 60 days at a time. Application for extensions of up to thirty (30) days can also be lodged onshore.

Generally, applicants must obtain a business visa in advance of arrival. However, in the interest of removing impediments to business and investment and streamlining entry, eligible nationals (a full list of eligible countries can be provided on request) may obtain a Business Entry Permit on arrivals at Jackson’s International Airfield (Port Moresby).

To be eligible for Business Entry Permit as a requirement, person must provide evidence in support of their visit and return/ongoing airline ticket.

In November 2004, the Papua New Guinea Government agreed to PNG’s participation in the APEC Business Travel Card Scheme. Necessary legislative amendments are currently being progressed and arrangements for installing the ABTC system are currently being made. Once implemented, approved applicants from participating

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APEC member economies will be able to travel to PNG on the APEC Business Travel Card.

Q119. (Regulatory Visa Regimes). How are the visa waiver program established,

in order to facilitate entry to member economies? A. Generally, all foreigners entering Papua New Guinea require an entry

permit. In some circumstances the entry permit may be issued upon arrival at the international airport. No consideration is being given to a waiver program.

When the APEC Business Travel Card Scheme is operational that PNG is in the process of implementing this year, all the ABTC holders will enter the country to conduct business.

Q120. (Short Term Business Entry) If short-term business visitors are allowed to

enter as tourists, is it possible to engage and sign contracts, or perform professional activities?

A. Visiting business persons can enter Papua New Guinea on the short

term business entry permit and not as tourists. Papua New Guinea strongly discourage this type of arrangement as it plays into other illegal activities by non- citizens. The short- term business entry provides for signing of contract etc.

ABAC Japan Q121. ABAC strongly recommends that Papua New Guinea implement the APEC

Business Travel Card (ABTC) scheme at the earliest possible time. A. The National Executive Council has approved the Regulation under

the PNG Migration Act. The Regulation is being finalised by the First Legislative Counsel for national gazettal in the first half of 2005.

Q122. ABAC encourages Papua New Guinea to introduce e-lodgement

arrangements for temporary residency applications. A. We have taken note of the suggestion by ABAC and believe that it is an

important arrangement for the government to consider in the immediate future. However, the government priority is to implement the Permanent Resident Permit system. This could be further enhanced by introducing the e- lodgement arrangement.

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Q123. Papua New Guinea is asked to make VISA application forms and visa

information available on the web, including on the website of its embassies/consulates in APEC economies and through the APEC Business Travel Handbook.

A. We plan to establish the Migration website in the first half of 2005 that

will provide the information. At present, the information are available in all of our embassies and consulates.

APEC Review Team Q124.When does Papua New Guinea anticipate conclusion of its review of

migration legislation? A. The review has been completed by a team of consultants and is going

through the process of the report to be considered by the Minister for Foreign Affairs & Immigration. This will be followed by a Policy Submission to the National Executive Council for approval and the drafting of the revised laws to be effected. National Executive Council approval will be sought again for the draft bills to be tabled in the National Parliament for passage. We plan to have the passed in Parliament during this year- 2005.

Q125. Does Papua New Guinea consider that this review will result in changes to

existing requirements affecting the mobility of business persons? A. The review is expected to result in changes to the existing laws but

more proactively removing impediments to business mobility and creating a conducive environment for foreign investment in Papua New Guinea.

Q126. In 2001, Papua New Guinea reported that a Foreign Policy Review was

being held that could result in changes to visa types and classes. Did this review result in any changes?

A. The review was conducted in 2001 but has been place on hold because

of political changes at that time. The process is being contemplated but has yet to be reactivated by the current government.

Q127.Please highlight some measures as examples that the economy has taken to

enhance the mobility of business people.

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A. To enhance the mobility of business people, the government has

reviewed the migration laws on the issuance of visas, new regulations on the APEC Business Travel Card scheme for PNG to implement the scheme this year and the Permanent Residence Permit are expected to come into effect this year and issuance of employment permit and visa processes are being harmonised.

(Additional Questions and Comments Raised at the Peer Review on Papua New Guinea by New Zealand) Q(add).What is the expected timing for the implementation of the business

mobility initiative mentioned in PNG’s presentation? A. There were three major business mobility initiatives alluded to in our

presentation and these relate to the API System, APEC Business Travel Card Scheme and the Machine Readable Passports.

With regard to the expected timing for implementation of the initiatives, firstly on API System, the feasibility study will be undertaken in June/July this year by the Department of Immigration and Multicultural Affairs of the Australian Government. The study should ascertain among others the necessary infrastructure that would be required if we do not have them. The report will be presented to the Government for consideration and decision before it can be implemented.

Secondly, with respect to the ABTC Scheme, PNG has begun the process of Implementation. The Regulation under the Migration Act has already been approved by the National Executive Council and the drafting is in the process of being completed for approval by the Governor- General for gazettal in the Government Gazette in the first half of this year.

Finally, on the Machine Readable Passports (MRPT)- the well- developed security features this will be introduced in June 2005.

(Additional Questions and Comments Raised at the Peer Review on Papua New Guinea by ABAC New Zealand)

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Q(add1).Without understating the magnitude of the challenges that still lie ahead, ABAC is of the view that Papua New Guinea has made commendable progress in recent years. This is a tribute to the extent of the structural changes underway and the Government’s determined push to fully implement the programme.





Q(add2).Changes in hand to ease immigration requirements are designed to

encourage greater business travel. This includes steps to comply with the APEC Business Travel Card scheme. Here again, capacity building with the relevant bureaucracy is a priority. How soon will the Business Travel Card be in place in PNG and used by business people to enter PNG?

A. The government has approved the Regulation under the relevant

Migration laws. The regulation will be officially gazetted in the first half of 2005. Once this is completed, the introduction of ABTC scheme will be operational and in force for business people to enter Papua New Guinea.

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