South Pacific Regional Trade and Economic Cooperation Agreement
Encyclopedia
The South Pacific Regional Trade and Economic Co-operation Agreement (SPARTECA) is a nonreciprocal trade agreement
in which Australia
and New Zealand
offer duty-free and unrestricted access for specified products originating from the developing island member countries of the Pacific Islands Forum
. Signed in 1981 and subject to Rules of Origin
regulations, the agreement was designed to address the unequal trade relationships between the two groups. The textile
s, clothing
and footwear
(TCF) industry has been a major beneficiary of SPARTECA through the preferential access
to Australian and New Zealand markets.
. In 1997 the TCF industry accounted for 26% of Fiji’s total domestic export
s; it contributed to some 3.5% of GDP and provided employment for about 18,000 people that account for 16% of those in total paid employment. The rapid expansion of the Fiji TCF industry has been attributed to the removal of TCF quota
s by the Australian Government in 1987 which allowed quota free and duty free access under SPARTECA, the introduction of the Tax Free Factory/Zone (TFF/TFZ) Scheme in 1988 and the Australian Import Credit Scheme (ICS).
-friendly arrangement in place of the ICS, the SPARTECA (TCF Provisions) Scheme was developed. SPARTECA (TCF) provisions concept complements the existing SPARTECA treaty and provides for a change in the way local area content (LAC) is calculated for TCF products (goods) entering Australia from Forum Island Countries (FICs). Under the existing SPARTECA arrangements, goods can enter Australia duty free where the Allowable Factory Cost is greater than or equal to 50% of the total ex-factory cost of manufacturing
the goods. These arrangements continue to stand.
The SPARTECA (TCF provisions) Scheme enables companies to utilise excess local area content (ELAC) from certain SPARTECA qualifying TCF goods to help meet the 50% content requirement in otherwise non-qualifying Eligible Goods. ELAC is only derived where a product’s LAC exceeds 70%. Similarly, ELAC can only be used where a product’s LAC is greater than 35%, and where there is a last process of manufacture performed in the FIC. The duration of the S-TCF Scheme is from March 1, 2001 to December 31, 2004.
Australia,
Fiji,
Marshall Islands,
Micronesia,
Nauru,
New Zealand,
Papua New Guinea,
Samoa,
Solomon Islands,
Tonga,
Tuvalu,
Vanuatu,
Kiribati, and
Niue.
Trade bloc
A trade bloc is a type of intergovernmental agreement, often part of a regional intergovernmental organization, where regional barriers to trade, are reduced or eliminated among the participating states.-Description:...
in which Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
and New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
offer duty-free and unrestricted access for specified products originating from the developing island member countries of the Pacific Islands Forum
Pacific Islands Forum
The Pacific Islands Forum is an inter-governmental organization that aims to enhance cooperation between the independent countries of the Pacific Ocean. It was founded in 1971 as the South Pacific Forum...
. Signed in 1981 and subject to Rules of Origin
Rules of origin
Rules of origin are used to determine the country of origin of a product for purposes of international trade. There are two common types of rules of origin depending upon application, the preferential and non-preferential rules of origin...
regulations, the agreement was designed to address the unequal trade relationships between the two groups. The textile
Textile
A textile or cloth is a flexible woven material consisting of a network of natural or artificial fibres often referred to as thread or yarn. Yarn is produced by spinning raw fibres of wool, flax, cotton, or other material to produce long strands...
s, clothing
Clothing
Clothing refers to any covering for the human body that is worn. The wearing of clothing is exclusively a human characteristic and is a feature of nearly all human societies...
and footwear
Footwear
Footwear consists of garments worn on the feet, for fashion, protection against the environment, and adornment. Being barefoot is commonly associated with poverty, but some cultures chose not to wear footwear at least in some situations....
(TCF) industry has been a major beneficiary of SPARTECA through the preferential access
Preferential trading area
A Preferential trade area is a trading bloc which gives preferential access to certain products from the participating countries. This is done by reducing tariffs, but not by abolishing them completely. A PTA can be established through a trade pact. It is the first stage of economic integration...
to Australian and New Zealand markets.
TCF in Fiji
The local Textiles, Clothing and Footwear (TCF) industry has grown over the last 10 years and is now one of the major industries in FijiFiji
Fiji , officially the Republic of Fiji , is an island nation in Melanesia in the South Pacific Ocean about northeast of New Zealand's North Island...
. In 1997 the TCF industry accounted for 26% of Fiji’s total domestic export
Export
The term export is derived from the conceptual meaning as to ship the goods and services out of the port of a country. The seller of such goods and services is referred to as an "exporter" who is based in the country of export whereas the overseas based buyer is referred to as an "importer"...
s; it contributed to some 3.5% of GDP and provided employment for about 18,000 people that account for 16% of those in total paid employment. The rapid expansion of the Fiji TCF industry has been attributed to the removal of TCF quota
Quota share
A quota share is a specified number or percentage of the allotment as a whole , that is prescribed to each individual entity ....
s by the Australian Government in 1987 which allowed quota free and duty free access under SPARTECA, the introduction of the Tax Free Factory/Zone (TFF/TFZ) Scheme in 1988 and the Australian Import Credit Scheme (ICS).
Australian ICS
The ICS commenced in July 1991 as part of a larger package of tariff and other industrial reforms in Australia. It was introduced as a temporary measure to encourage Australian TCF exports and terminated on June 30, 2000, except in the case of Fiji, where an extension had been granted to October 2000.Details of SPARTECA
Given the Australian and Fiji Governments’ commitment to developing a WTOWorld Trade Organization
The World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...
-friendly arrangement in place of the ICS, the SPARTECA (TCF Provisions) Scheme was developed. SPARTECA (TCF) provisions concept complements the existing SPARTECA treaty and provides for a change in the way local area content (LAC) is calculated for TCF products (goods) entering Australia from Forum Island Countries (FICs). Under the existing SPARTECA arrangements, goods can enter Australia duty free where the Allowable Factory Cost is greater than or equal to 50% of the total ex-factory cost of manufacturing
Manufacturing
Manufacturing is the use of machines, tools and labor to produce goods for use or sale. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale...
the goods. These arrangements continue to stand.
The SPARTECA (TCF provisions) Scheme enables companies to utilise excess local area content (ELAC) from certain SPARTECA qualifying TCF goods to help meet the 50% content requirement in otherwise non-qualifying Eligible Goods. ELAC is only derived where a product’s LAC exceeds 70%. Similarly, ELAC can only be used where a product’s LAC is greater than 35%, and where there is a last process of manufacture performed in the FIC. The duration of the S-TCF Scheme is from March 1, 2001 to December 31, 2004.
Member Countries
Cook Island,Australia,
Fiji,
Marshall Islands,
Micronesia,
Nauru,
New Zealand,
Papua New Guinea,
Samoa,
Solomon Islands,
Tonga,
Tuvalu,
Vanuatu,
Kiribati, and
Niue.
See also
- Melanesian Spearhead GroupMelanesian Spearhead GroupThe Melanesian Spearhead Group is an intergovernmental organization, composed of the four Melanesian states of Fiji, Papua New Guinea, Solomon Islands and Vanuatu as well as the FLNKS of New Caledonia. It was founded as a political gathering in 1983...
- North American Free Trade AgreementNorth American Free Trade AgreementThe North American Free Trade Agreement or NAFTA is an agreement signed by the governments of Canada, Mexico, and the United States, creating a trilateral trade bloc in North America. The agreement came into force on January 1, 1994. It superseded the Canada – United States Free Trade Agreement...
- South Asian Association for Regional CooperationSouth Asian Association for Regional CooperationThe South Asian Association for Regional Cooperation is an organisation of South Asian nations, founded in December 1985 by Ziaur Rahman and dedicated to economic, technological, social, and cultural development emphasising collective self-reliance. Its seven founding members are Bangladesh,...
- Pacific Agreement on Closer Economic RelationsPacific Agreement on Closer Economic RelationsThe Pacific Agreement on Closer Economic Relations is an umbrella agreement between members of the Pacific Islands Forum which provides a framework for the future development of trade cooperation.It was first signed at Nauru on 18 August, 2001 and entered into force on the 3rd October 2002...
- Trans-Pacific Strategic Economic Partnership (P4)