January 29, 2017

‘PNG’s tuna canning industry dependent on EU market’

PAPUA NEW GUINEA tuna which has preferential treatment in the Europe market faces uncertainty given Britain’s exit from the European Union. Australian economist with the Australian National University Paul Flanagan said given Brexit, it is not known what will become of the arrangement which PNG has enjoyed over other tuna exporting nations globally. He was responding to questions on the implications of the TPP and Brexit. “That will depend on what future trade deals UK negotiates – and that is unknown,” he said.

Mr Flanagan said his view was that preferential access to the remainder of Europe would remain subject to environmental and other conditions. He said PNG’s tuna canning industry remained very dependent on its special access to the European Union market. “Most producers in PNG also have factories in other Asian countries such as the Philippines and Indonesia. These other countries are much cheaper to produce than PNG.
This is because of items such as fuel subsidies. “When talking to manufacturers, the key differences related to items such as reliable and well-priced energy (PNG expensive), security costs (PNG higher) and labour laws (movements in the minimum wage appear to affect the industry, and PNG’s minimum wage rates are comparatively high for unskilled labour),” he said. On the issue of the dumping of the Trans Pacific Partnership by US president Donald Trump, Mr Flanagan said this will not have any direct impact on Papua New Guinea. Rather, he says there may be some indirect impacts as the three biggest anticipated winners from this trade agreement are Vietnam, Japan and Singapore. “Their growth rates will now be lower, which will in turn limit the export opportunities for PNG businesses to such countries. “Economic history indicates that globalisation has generally been very positive for development. The pro-trade policies of many Asian countries have led to dramatic reductions in poverty and opportunities for many. “PNG is missing out on many of these opportunities.
When PNG businesses are asked about the greatest impediments to business, they do not talk about a need for increased protection.  Rather, their main perceived barrier currently is the lack of foreign exchange as well as the more traditional issues such as the need to improve the business environment generally - better regulations, better transport, better utilities, better security,” Mr Flanagan said. He said that the Kina exchange rate should depreciate down to market levels and maybe even lower to counter-impact the “resource curse’ which is hurting the PNG people.” Mr Flanagan said the issue currently is not a need for action including import bans to “protect” PNG industry. Post Courier/ONE PNG