Posted By Staff Reporter : www.pngfacts.com
The Minister for Trade Commerce & Industry, Richard Maru says implementing a rice policy in Papua New Guinea where 80 percent rice import quota is given to a company that has not grown any rice in PNG will be a very serious breach of our obligations under the World Trade Organization (WTO).
Minister Maru made this statement in Parliament in response to questions raised by Member for Rabaul, Dr Allan Marat following serious concerns raised by the Australian Government over the new PNG Rice Policy and especially the policy to provide import quotas for rice importers.
The Australian Government is irked over PNG Government’s plans to provide an 80 percent quota to a proposed unknown rice importer Naime Agro Innovative Industry Limited in a strongly worded letter given to Minister Maru by the Australian Trade Minister, Steven Ciobo.
MrCiobo claims that the proposed rice policy will amount to unilateral expropriation of an Australia Investment (Trukai Rice) and may breach several provisions of the Australia–Papua New Guinea for the Promotion and Protection of Investments (IPPA) including Papua New Guinea’s obligation to provide fair and equitable treatment to Australian investors; a prohibition of indirect expropriation without proper adequate and effective compensation and prohibition of an arbitrary and unreasonable or discriminatory measure.
Dr Marat questioned if such a policy to give an 80 percent rice import quota to an unknown rice importer was legal or illegal within the WTO Rules based on the Multilateral Trading System and other trade agreements PNG has signed bilaterally.
He further questioned on what will be the consequences to PNG’s image as an international investment destination if the country goes ahead to implement the quota policy against the current threat of the Australia Government to invoke the WTO Dispute Settlement Process and also take PNG to court on the grounds of expropriation, discrimination and loss of business.
Minister Maru in response, clarified that any move to introduce the new rice quota policy will be in serious breach of obligations to the WTO Rules Based on Multilateral Trading System that we have to trade within as a member of the WTO.
“The breaches will be on the grounds of uncompetitive behavior under competition laws, amounts to indirect expropriation, discriminatory and the loss of business that needs to be compensated for”, said Minister Maru.
He further pointed out that such a policy of giving an 80 percent rice import quota to a new company which will have the effect of taking away the business currently enjoyed by Trukai Industries an Australian majority owned company will also amount to a serious breach of the Investment Protection and Promotion Agreement that Papua New Guina has signed with Australia and is legally locked into.
After seeking both technical advice from the country’s WTO Office and the State Solicitor, Minister Maru confirmed to Parliament that implementing a rice policy where 80 percent rice import quota is given to a company that has not grown any rice in PNG will be in serious breach of our obligations under the WTO andwill be illegal as per the advice being
Minister Maru further told Parliament that such a decision will result in Australia invoking the dispute resolution provision under the trading rules of the WTO under the Multilateral trading rules and Australia will win hands down.
He said the results of the move to introduce that rice policy will also be a major international embarrassment for PNG in the international investment and international trading world.
“PNG will be tasked to pay out Trukai Industries million and billions for loss of business. In addition, PNG will again be taken to court for breaking competition laws for expropriation and again damage of reputation as a country that honors our bilateral trade agreement like the Investment Protection and Promotion Agreement (IPPA) that we have signed with Australia”, said Minister Maru.
“Such act will also result in totally destroying our reputation as a country that protects foreign investors as a safe and attractive investment destination for Australia or other current and potential Investors. It is also a policy thatis not worth pursuing and I will advise the Prime Minister of my position in writing as soon as the State Solicitor provides me the verbal advice he has given to me in writing in the coming weeks”, said Minister Maru.
Minister Maru said there is however an alternative to attract large scale rice investment in the country that is acceptable under the WTO trading rules and agreements we have signed up like the IPPA with Australia.
“We can offer similar package as we did to “Ramu Sugar” under the 15 years “Pioneer Industry Protection and Incentive Package”. The package can be structured as follows;-
1. We give the investor a 10 year tax holiday.
2. Impose up to 30% import tariff for all rice imports under the WTO Tariff Bound Rates for rice.
3. Provide duty free import support for the large scale domestic rice investors for buildings including the tractors etc.
Minister Maru further announced that the PNG Government is adamant on developing the domestic rice industry.
The Minister said the PNG Government maintains that Trukai Industries has not done enough to grow rice domestically despite the high profits it has made for over 40 years in this country and instead continues to rely on rice grown in Australia or in Asian countries which it imports in bulk to its repackaging plant in Lae to process and package under its famous “Trukai brand”.
The PNG Government is keen to offer a very attractive package to any interested rice investor who want to invest in a large scale domestic rice project in PNG to help PNG replace the K700 million it spends annually to import rice into PNG in a package that does not breach our WTO Trading rules and does not break any other agreements and laws we have to operate within including our own competition laws.
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