Review of the Tariff Reduction Program in Papua New Guinea

The Project at A Glance

International Economics, through its CEO, is undertaking an impact assessment of the Tariff Reduction Program (TRP) in Papua New Guinea (PNG) to ascertain the cost and benefits of the program, and the impact of TRP on the Country’s economy, including businesses, consumers, and trade performance.

The project is being implemented through United Nations Conference on Trade and Development (UNCTAD), which is responsible for the “Improving Pacific Islands Customs and Trade” (IMPACT) project, a component of the ‘Pacific Regional Integration Support’ Programme (PRISE) funded by the European Commission under the 11th cycle of the European Development Fund.

What We Found

The Tariff Reduction Program (TRP) was introduced as part of an economic reform agenda aimed at enhancing PNG’s private sector efficiency by exposing local industries to global competition through progressive reductions in import tariffs. However, the program’s success depended on a complex interplay between trade policy, domestic industry adjustments and the broader economic environment, and in 2018 the Government suspended the TRP, mainly due to funding constraints that prevented a planned review of the final phase of TRP implementation. The suspension of the TRP marked a shift in PNG’s trade policy, raising concerns about the long-term direction of tariff reforms and the country’s commitment to trade liberalization.

Against this backdrop, International Economics is undertaking a comprehensive review of PNG’s TRP, utilising a combination of qualitative and quantitative data to conduct an in-depth analysis of the TRP’s effects on the economy, key sectors, and consumers. The TRP review will set a new policy direction for the future tariff to promote sustainable economic growth and a smooth trading system for the country over the medium to long-term. The Team will also validate findings through structured interviews and surveys, with the support of UNCTAD and the Government of PNG.

Our Strategy and Impact

International Economics is assessing the costs and benefits of the TRP, which has been suspended. The Team will assess the effectiveness of the TRP in exposing PNG companies to international competition through reduced tariff rates and evaluate the impact of tariff reductions on private sector efficiency and productivity by interviewing selected companies to understand their response to the policy. The analysis will also look at the benefits and costs of TRP on different stakeholders, including consumers (price reductions), businesses (competitiveness), employees (job creation/loss), and trade participants (importers/exporters), and determine TRP’s role in supporting downstream processing and value addition in sectors such as manufacturing, fisheries, and agriculture.

The overall aim of this assignment is to contribute to increasing knowledge and understanding of PNG’s TRP and its effect on the economy. Furthermore, the Team will provide conclusions and recommendations on the TRP. The findings will support the refinement of PNG’s tariff policy, ensuring alignment with national development strategies such as the Medium Term Development Plan III and the National Trade Policy (2017–2032).

Our Core Solutions

Given the complexities of international trade, countries must ensure that they develop a coordinated and coherent policy framework to ensure maximum impact. At International Economics, we support the public and private sectors in navigating the policy and negotiation landscape regarding international trade. This includes establishing robust monitoring and evaluation framework through sophisticated real-time dashboards and reporting systems to ensure the best outcomes. We provide advocacy services to empower delegations and negotiators to participate effectively in trade negotiations and deliberations and advocate for their countries’ interests and positions.