Kava has the potential to regain its glory as major Pacific export to Europe, Shiu Raj

Pacific Islands Private Sector Organisation:

Thursday, 26 June 2014

The recent decision by Germany to lift the ban on kava products has the potential for kava from the Pacific to ‘regain its glory’ as a major export to Europe.

Pacific Islands Forum Secretariat’s director Economic Governance programme, Shiu Raj made the optimistic observation at the 2nd Pacific-EU Business Forum underway in Port Vila, Vanuatu.

“The battle to get the EU ban on kava lifted has not been an easy one. With the recent ruling by the German Courts that the kava ban is indeed illegal and unwarranted, there is hope that kava can once again be exported to the EU in the near future.

The positive ruling in Germany is the beginning of a significant amount of work that needs to undertaken by kava producers in the Pacific, said Raj.

“There are some issues around the quality of our product and the variety of kava that we can export. These are important issues that we need to deal with to ensure that our supply chain are robust enough and our marketing network is strong to profile the product and establish its reputation.

“The reality is that kava as a medicinal product has utility that the pharmaceutical industry has been interested in. This may provide an opportunity for international pharmaceutical companies to set up operations in the Pacific to use these products which are in abundance naturally or organically. That can be used as a basis to produce these products in the Pacific, Raj told PACNEWS.

The PIFS senior executive paid tribute to the work done by Pacific Ambassadors in Brussels, especially Vanuatu’s Ambassador to the European Union, Roy Mickey Joy.

“Allow me to acknowledge the efforts of the “Friends of Kava” countries from Pacific ACP region, and in particular, the Government of Vanuatu under the capable stewardship of Vanuatu’s Ambassador to the European Union, His Excellency Roy Mickey Joy and his technical team for advocating the interests of the Pacific region.

Apart from kava, the other key export that would benefit immensely from the Economic Partnership Agreement (EPA) with the European Union is fisheries. Under the iEPA, Fiji and Papua New Guinea benefit from global sourcing preferential rules of origin for canned and cooked fisheries products (HS 1604/1605).
Pacific ACP States are trying to get an extension of global sourcing for fresh, chilled, frozen, dried and smoked fisheries products (HS 0304/0305).

“The EU rules of origin as they stand are very restrictive when it comes to fisheries imports. In order to qualify for duty free and quota free access to the EU, the fish must be caught by a locally owned and registered vessel. This is highly impractical for a majority of Pacific ACP States who do not have locally owned fleets due to the high costs involved and issues related to efficiency and diseconomies of scale, Raj said.

Global sourcing, which was only given to the Pacific region due to its unique circumstances, enables the sourcing of fish from foreign-owned vessels as long as they are EU certified and land their catch in a Pacific ACP States for further processing.

He said global sourcing has resulted in significant investments, increased export earnings and job creation in Papua New Guinea.

“It is anticipated that by 2016 over 30,000 workers, mainly women, will be directly and indirectly employed in the canning sector in PNG with tens of millions of dollars worth of investments in the pipeline, Raj revealed.

Canning operations are quite large in size and require significant investments in infrastructure and adequate access to large volumes of water. This, he said is not feasible in smaller Pacific ACP States.

“The Pacific ACP region has been requesting the EU to include global sourcing for fresh, chilled and frozen fisheries products in the comprehensive EPA which would benefit the Smaller Island States (SIS) in particular.

Raj said global sourcing has the potential to stimulate investments in onshore processing for Pacific ACP States and help them derive greater returns from their fisheries resources.

“Some of the Pacific islands are already producing fresh, chilled and frozen fish fillets and steaks and this can potentially be exported to the EU subject to meeting the required food safety and SPS requirements, said Raj.

Currently, two way trade between the European Union (EU) and the Pacific is around Euro 1 billon in favour of Europe.

Private sector representatives present at the Business Forum have been urged to ‘deal with the trade imbalance.’

While the Pacific has a handful of products that have the potential to reach EU markets, there is an influx of European goods in the Pacific.

“We have seen more and more of Peugeots, Volkswagen, Renault, Fiats, BMW and Mercedes on Pacific roads which would have an impact on the revenue collected from tariffs. We need to make a concerted effort to deal with this trade imbalance and I would encourage the ACP Business Climate Facility and other EU based agencies to assist the Pacific businesses in exporting its products to the EU," said Raj.

Read story: Pacific Islands Private Sector Organisation

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