THERE is currently an import restriction on PNG made Ox & Palm corned beef in Fiji and perhaps a ripple effect on the local economy.
The restriction on our popular corned beef is not as a result of a biosecurity issue as assumed by the National Agriculture Quarantine and Inspection Authority (NAQIA) and the Agriculture and Livestock Minister, Tommy Tomscoll.
If quarantine inspections and the appropriate technical requirements have been met to clear Ox & Palm for export as reiterated to by NAQIA, Fiji is possibly implementing a restrictive trade policy to promote the Fijian made Bully Beef and its own, other locally produced substitutes.
PNG should therefore retaliate against the restriction imposed on Ox &Palm by restricting the import of ‘Bully Beef’, a substitute or a combination of both.
PNG authorities should either impose an import quota on the Bully Beef, a substitute or a combination of both or increase the excise duty charged on its or their landing on PNG sea ports.This should be just fair to the Fijian restriction on Ox & Palm which is currently in place.
However, PNG authorities are going nowhere near a mutual trade agreement with Fiji provided PNG does not have an option in place to counter the economic implications of Fiji’s import restriction on Ox & Palm.
Though the official arrangements by NAQIA and its Fijian counterpart are good for long-term mutual trade relationship, a retaliation against the Fiji import restriction Ox & Palm is of immediate significance to cushion a possible terms of trade gap and exchange rate risk.
One of the implications of the restriction of Ox&Palm by Fiji with zero retaliation by PNG is the sharp depreciation of the Kina against the Australian dollar (AUD) and other major currencies.
Currently, the Kina is trading around a quarter of the AUD on the foreign exchange market and this could perhaps be related to the current balance of trade incorporating the restricted import of Ox & Palm imposed by Fiji.
As Ox & Palm is restricted on Fiji’s import balance, this is indirectly reducing the demand for PGK on the foreign exchange market and further resulting in its depreciation relative to the AUD and other major currencies.
This is because the exchange rate is indirectly influenced by the balance of trade or export less import in the goods market.
PNG should therefore cut down the number of imports from Fiji relative to its exports through a restrictive trade policy such as an import quota or an increased import duty as suggested above.
This intervention will perhaps improve mutual trading arrangements between PNG and Fiji and further cushion terms of trade gaps in the goods market and exchange rate volatility associated with official interventions in the goods market.
Mike H, via emai