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News Release 23-095
Inv. No(s). 332-593
Contact: Elizabeth Nesbitt, 202-205-1819
The U.S. International Trade Commission (USITC) today released a report on U.S. trade and investment with the Pacific Islands. The investigation, U.S.-Pacific Islands Trade and Investment: Impediments and Opportunities, was requested by the U.S. Trade Representative in a letter received on September 29, 2022.
The 22 Pacific Island economies covered in this report are American Samoa, the Cook Islands, Fiji, French Polynesia, Guam, Kiribati, the Federated States of Micronesia, Nauru, the Northern Mariana Islands, the Marshall Islands, New Caledonia, Niue, Palau, Papua New Guinea, the Pitcairn Islands, Samoa, the Solomon Islands, Tokelau, Tonga, Tuvalu, Vanuatu, and Wallis and Futuna.
The report provides an overview of the Pacific Island economies, descriptions of trends in goods and services exports to the United States and investment from the United States, and analysis on the use and utilization of the Generalized System of Preferences and the trade preferences provided to the U.S. territories and Freely Associated States. In addition, the report identifies and profiles several sectors as having potential for increased export to or investment from the United States. The report describes impediments to increased exports in these sectors as well as broad initiatives and technical assistance to overcome impediments to trade and investment.
Major Findings:
The Pacific Island economies collectively export mostly extractive commodities like natural gas, minerals, and metals to the world. However, they export mostly fishery and agriculture products like tuna, water, coffee, and cocoa beans to the United States. The value of goods exported to the United States from the region decreased slightly between 2017 and 2021. Pacific Island exports of services to the United States, largely through tourism, declined during the COVID-19 pandemic. Post-pandemic, both goods and services exports have begun to recover. Most of the limited U.S. investment in the region is concentrated in Fiji and Papua New Guinea and mainly in tourism and extractive sectors, respectively.
Regarding preferential trade access to the United States, Pacific Island beneficiary developing countries had a relatively low level of trade of GSP-eligible products but had a high GSP utilization rate during 2017-21 (measured as the percentage of GSP-eligible products claiming GSP benefits upon entry to the United States). The report describes the characteristics of—and factors determining—Pacific Island use and utilization of GSP. The report also describes the characteristics of and utilization of preferential trade access for the U.S. Territories and Freely Associated States.
As a region of small island developing states, the Pacific Islands face a range of impediments to trade and investment. Their small geographic and economic size coupled with large distances between both the islands and external markets often result in a lack of economies of scale, high fixed costs for production, limited institutional capacity, and limited economic diversification. The region faces impacts from climate change and natural disasters that can deter investment and disrupt production in economic sectors that demonstrate potential for development and export growth.
Seven goods sectors and two services sectors were identified as having potential for increased export to and, in some cases, investment from the United States. The sectors are fish, nickel, spices, virgin coconut oil, cocoa, kava, coffee, tourism, and business process outsourcing. An additional sector, renewable energy, was identified for its investment potential from the United States. In many of these sectors, Pacific Island economies are developing strategies to add more value to their products and services or to differentiate their products and services to compete with larger sources of supply outside of the Pacific Islands region.
Initiatives and technical assistance that would likely benefit Pacific Island trade and investment include focusing on climate change adaptation and resilience, reducing land rights insecurity, modernizing infrastructure, and expanding information and communications technology. Industry and government stakeholders recommended other areas for possible enhancement of U.S. engagement, including technical training to help exporters navigate and comply with U.S. market access requirements, updates to preferential market access programs, and support for implementation of the WTO Agreement on Fisheries Subsidies.
U.S.-Pacific Islands Trade and Investment: Impediments and Opportunities (Investigation No. 332-593, USITC Publication 5463, September 2023) is available on the USITC website at: https://www.usitc.gov/publication_5463. The modeling underlying the analyses associated with this report is available at https://www.usitc.gov/publications/332/pacific_island_dashboard.
About factfinding investigations: USITC general factfinding investigations, such as this one, cover matters related to tariffs, trade, and competitiveness and are generally conducted at the request of the U.S. Trade Representative, the House Committee on Ways and Means, or the Senate Committee on Finance. The resulting reports convey the Commission's objective findings and independent analyses on the subjects investigated. The Commission makes no recommendations on policy or other matters in its general factfinding reports. Upon completion of each investigation, the USITC submits its findings and analyses to the requester. General factfinding investigation reports are subsequently released to the public, unless they are classified by the requester for national security reasons.