The tiny island Kingdom of Tonga in the South Pacific is about to make history, by joining the WTO on what are arguably the worst terms ever offered to any country.The appalling terms of Tonga’s accession package show that nothing has changed in the way the world’s smallest and most vulnerable economies are treated as they seek to join the WTO. It is a further demonstration that the fine words of the Doha Development Agenda mean nothing when pitted against the commercial interests of the world’s richest countries.
Tonga has been forced to give up more on tariffs than any of the countries involved in its negotiations to join the WTO, including countries like NewZealand, the USA and the EU, all of whom played active roles in the working party. In fact, its bound tariffs are lower than any other country in the history of the WTO, with the sole exception of Armenia. Tonga will be allowed up to a maximum of 20% tariff on all products.This contrasts with the 350% tariff that the US applies to beef imports, and an equivalent tariff of over 300% that the EU uses to block sugar imports into its market.
o The money to pay for Tonga’s public health, education and other vital services has come largely from import tariffs until this year. Now that it must slash applied tariffs under its terms of accession, it has just introduced radical changes to its tax system to cope with the tariff reductions. If this new system fails to deliver, there is nothing Tonga can do to restore its income from tariffs, because its hands are tied by its WTO commitments so Tonga has committed more in services sectors of vital public interest (like education) than any of the rich countries on the working party and its overall commitments in services are much more extensive than most other developing countries
o The many commitments to “WTO-plus” liberalization of the economy remove most of the policy space Tonga will need if it is ever to emulate now developed countries
o Many of the terms extracted from Tonga are of no benefit to its people (eg changes to the intellectual property regime) and will cost a lot of money to implement, money that will not be available for Tonga’s development needs. Blood form a Stone