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©Jean Bertrand Azapmo

Providing trade assistance to Federated States of Micronesia

Providing trade assistance to Federated States of Micronesia

Hub and Spokes II Programme: Success story - building The Federated States of Micronesia's productive sector capacity.

The Hub and Spokes II Programme provides trade experts to national ministries and regional trade organisations to enhance trade capacity in the African, Caribbean and Pacific (ACP) group of states. It is a joint programme of the European Union (main donor), ACP Group Secretariat, the Commonwealth Secretariat and the Organisation internationale de la Francophonie.

Jean Bertrand Azapmo, a trade adviser in the Department of Resources and Development in the Federated States of Micronesia, has been supporting the Programme since 2012.

Read his blog below:

The Federated States of Micronesia (FSM) consists of four states, Chuuk, Kosrae, Pohnpei and Yap, spread over the Pacific Ocean and with a population totalling over 100,000. FSM’s economy has grown at a slow pace. The trade deficit remains high with imports outstripping exports by about USD$129 million (in 2014).

The capacity to export continues to be hampered by a number of the country’s inherent disadvantages - small size, geographical isolation and distance from major markets, limited natural resources, the high cost of transport for trade, and vulnerability to natural disasters. For example in 2015, the country was severely hit by typhoons and storms affecting the local economy. As a result, FSM continues to depend on Official Development Assistance (ODA).

The USA is the largest donor through the Amended Compact of Free Association. However, the financial assistance under this arrangement is scheduled to end in 2023, which will put pressure on the government to find alternative sources of revenue. There is a burgeoning private sector comprising mainly small-sized enterprises, operating in wholesale and retail, construction, and the small hotel industry. The productive sector is limited to subsistence agriculture and small agroprocessing. Nevertheless FSM has a great potential in fisheries, tourism, and many niche exportable agricultural products, including black pepper, virgin coconut oil, and coffee.

Under the Hub & Spokes II Programme, I have been providing trade and legal advisory services to the Department of Resources and Development. A key priority for the country has been building the capacity of the productive sector and accessing regional and global value chains. On that front I have been supporting FSM in the negotiations for the Pacific Agreement on Closer Economic Relationships (PACER Plus) with Australia and New Zealand, the Economic Partnership Agreement with the European Union, and Integrated Market in Asia and the Pacific meetings to develop the country position based on the unique challenges faced by Small Island Developing States, and also the need to reduce their high trade costs.

I have undertaken consultations and market analysis for the development of the FSM 2015 Investment Guide. Hon. Marion Henry, Secretary of the FSM Department of Resources and Development, acknowledged the important advisory services provided by the Hub and Spokes II Programme at the launch of the guide.

In addition, I have trained hundreds of public and private sector trade policy practitioners on the treaty establishing the Micronesian Trade and Economic Community (MTEC) which I helped develop in collaboration with the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP). The MTEC institutional framework aims to help create an enabling national and sub-regional environment, foster entrepreneurship and innovation and strengthen capacity to achieve sustainable development objectives of its three founding members (FSM, the Republic of Palau and Republic of the Marshall Islands) and facilitate their integration into the global economy.

To support the MTEC process I secured technical assistance from the International Trade Centre and United Nations Conference on Trade and Development to support FSM, Palau, and Marshall Islands in conducting their first trade and investment facilitation needs assessments. This resulted in training 37 stakeholders in trade and investment facilitation and the adoption of a MTEC Trade and Investment Facilitation Initiative roadmap by MTEC Ministers.

Another accomplishment worth mentioning is the establishment of the FSM Coffee Farmers Association. Although coffee farming was first introduced in the FSM during the Japanese administration in the 1920s, it ceased to exist by 1945 after they left. In 2009, however, a group of enthusiastic farmers based in Pohnpei reintroduced coffee farming, which is now seen as an emerging niche product. But with few resources, farmers struggled to put the necessary legislation in place. After several consultative meetings with the farmers, the Department of Justice, and the Registrar of Corporations, I helped re-draft the legal documents to enable the farmers to establish their association.

The FSM Coffee Farmers Association was officially launched in March 2015. Through this formal network, coffee farmers were able to mobilise support quickly under the FSM Division of Agriculture, the College of Micronesia-Cooperative Research and Extension service, the University of Hawaii at Manoa and the Secretariat of the Pacific Community to deal with pests and diseases affecting coffee trees in Pohnpei. The Association still faces several challenges such as establishing a nursery and improving the quality and standards of their products, which are already available in local stores. I will continue to provide trade assistance to ensure that the coffee market can get off the ground.

For more information on the Hub and Spokes II programme, please email the team