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Fiji’s Unfair opposition to Vanuatu kava [Fiji Times and Island Business, September 2004]

28/03/2012

  Do the larger countries like Fiji and PNG really believe in their trade agreements, like the Melanesian Spearhead Group (MSG)?  The evidence from the recent kava kerfuffle suggests that they don’t.

A year ago, we complained when European drug companies very unfairly got our exports of kava to the EU banned on spurious health grounds.

Is the Fiji Kava Council trying to use the same kinds of unfair tactics (and worse) to keep out competition from Vanuatu?

And what is the Fiji Government’s position on all these strange goings on?  Ministry of Trade and Commerce?  Ministry of Health?  Ministry of Foreign Affairs?

“Banned” unhealthy kava?

  The headlines proclaimed:  “Banned kava “slips” through” (The Fiji Times, 1 August 2004). And there were serious allegations made against the Vanuatu kava.

The Fiji Kava Council allegedly feared that “a banned kava from Vanuatu believed to cause liver problems has infiltrated the local market”.

The Chairman of the Fiji Kava Council was quoted as referring to “the laxity and corruption” in Vanuatu’s quarantine inspection which allowed the supposedly banned “Tu Dei” variety to be exported from Vanuatu to Fiji.

Although it was not stated in the newspaper article, did this also mean there was also laxity and corruption at the Fiji end as well?

The newspaper article referred to “a medical source” which warned kava drinkers to be careful and not take the Tu Dei kava lightly.

Really?  Are all these allegations facts?  Or are they really unfair attempts by the Fiji Kava Council to keep out competition?

The cheap kava allegation

  It was alleged that Vanuatu dealers were selling kava for as low as $6 per kg, as if this was unfair.

The Fiji kava importers noted that the prices were about $11 to $12 per kg, which was still lower than the Fiji kava ($21 to $22 per kg for the kava roots, and about $16 to $17 per kg for the kava chips).

Whichever price was correct, why on earth should lower prices of Vanuatu kava be a problem?

That is surely the objective of the free trade agreement: that consumers in the MSG should be able to buy their products from whichever producer, from whichever country, giving them the price/quality combination they want.

And if more Vanuatu kava was bought, eventually their price would rise, while the Fiji price would fall.  And eventually the prices would roughly equalise, with the more efficient producers from both countries remaining in the market.

In economics, these are the good effects of trade, not disadvantages.

Strangely, the Chairman of the Fiji Kava Council was even reported as saying that “local suppliers are not harvesting in the belief that the price at the end of the year will be much better”- for exporting to Europe when their ban was lifted.

So is it that the Fiji kava suppliers don’t want to supply the Fiji market (because the prices are too low for them), and they don’t want the Vanuatu suppliers to supply it either?

Other stupid allegations

  There are even stranger accusations than the cheap price.

The Chairman explained that the younger Vanuatu farmers preferred to grow the Tu Dei variety because it was a “fast bucks earner”; that it had a stronger effect (the effects allegedly lasted for two days- hence the poetic name Tu Dei), matured faster, and could withstand harsh conditions and diseases.

Well.  What is so undesirable about these characteristics of Vanuatu kava?

Would not Fiji farmers (young or otherwise) choose their crop varieties for these very same reasons?  If they could earn money faster, if the products were really potent (like over-proof rum), and if the variety could withstand variable climatic conditions and pests.

If the Vanuatu kava farmers were following these practices, then perhaps the Fiji kava farmers should learn from them, not criticise them.

And the Chairman of the Fiji Kava Council even warned that Fiji’s working class was really at risk from the Tu Dei kava, because they could get sick, and “such intoxication could mean poor performance or missing work”.

He warned that “Since Fijians are big kava drinkers we should be careful because we tend not to differentiate kava as long as it is kava”.

Well.  Does, does the Chairman thinks that Fiji workers don’t suffer the same consequences from imbibing Fiji kava?

Perhaps the Fiji employers should be asked for their views on this matter.

The threats

  The newspaper (The Fiji Times, 28 July 2004) reported that the Chairman of the Fiji Kava Council “warned Vanuatu authorities that if they did not clean up their act, the Fiji Kava Council would take drastic measures and ban all kava products from Vanuatu to Fiji”.

Even if the allegations were true, does the Fiji Kava Council have authority to ban competing products?

And why are the Fiji authorities remaining silent, especially the Ministry of Trade and Commerce?

Why is the Fiji Kava Council issuing pronouncements on the health effects of Vanuatu kava, and not the Fiji Ministry of Health?

The Fiji Government needs to get its act together to ensure that special interest groups do not unfairly undermine the trade agreements that the Governments have signed.

Larger countries must be fair

  We can understand why smaller countries fear having free trade agreements with larger countries.

Usually the larger countries have larger producers and manufacturers, who are usually more efficient than the producers in the smaller countries, and have lower prices.

And when free trade begins, the tendency is for the larger producers to drive the smaller producers out of the market.

And smaller countries have to be convinced that they can benefit out of whatever products and activities they are good at.

Usually the smaller countries don’t have many products which they can export to the larger countries.

Here a smaller and economically weaker country (Vanuatu) does have a product- kava- which Fiji consumers want to buy, and are buying, at a mutually agreeable price.

And the Fiji kava interests are going all out to discredit the product and discourage its import from Vanuatu.

That’s not fair, is it?  That’s not in the spirit in which trade agreements like the MSG were signed.

 

And if large countries like Fiji and Vanuatu cannot be fair to their smaller partners, how can they expect the smaller countries to support such trade agreements?

 

The lessons from the kava kerfuffle

 

  The Pacific Island countries should learn from these kava goings on.

 

Whenever new trade between the PICs begins under the MSG Agreement or the PICTA, there will be some domestic interests which will feel threatened.  They will naturally try to stop the new competition, using any means at their disposal.

 

For products like kava, local producers may try to convince the home government that the new imports are endangering local health etc.  Whatever the truth of the matter, Governments must set down rules for these situations.

 

For manufactured products, another potentially powerful ground for resisting competition will be the Rules of Origin which requires that at least 50% of the value added in the product must be from the exporting country or the PIC partners.

 

This 50% is extremely rigidly defined, and challenges could take months if not years to resolve.  In the meantime, the trade will come to a dead stop.  And many exporters will simply wonder whether it is at all worth it to export to other PICs.

 

If the PICs are serious about enhancing trade amongst themselves, they should ensure that situations like the kava kerfuffle do not occur.  Or, if they do occur, they are dealt with fairly and swiftly.

 

Better still, the PICs should seriously consider not wasting any further resources or energy on “dead-end” trade agreements such as MSG and PICTA, and focus completely on getting the best deal out of PACER, the agreement with Australia and NZ.

 

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