Minister of Foreign Affairs and External Trade, William Haomae, has announced the Solomon Islands Government's intention to include alcohol and tobacco in the Pacific Island Countries Trade Agreement (PICTA).Mr Haomae made the announcement at the current Forum Trade Ministers Meeting on PICTA in Nadi, Fiji.
The PICTA is an agreement among Pacific island countries to gradually remove import taxes, in the hope of encouraging and increasing trade within the Pacific region.
Solomon Islands announced that it was ready to participate in the agreement in late 2007.
By 2021, goods produced in other Pacific countries will be taxed in the same way as goods made in Solomon Islands. So far, alcohol and tobacco have been excluded from this agreement, but Pacific ministers of trade will decide whether they should be included in 2009.
Minister Haomae told the meeting that consultation with the industries concerned and other government departments would be required before a decision could be made.
"If alcohol and tobacco were to be included, it would have to be done in such a way as to protect government revenue, and to avoid an increase in overall consumption - by replacing tariffs with excise duties as necessary," he added.
This would mean that the average price of alcoholic drinks and cigarettes would not fall, but that the price of products from other Pacific countries would fall in line with the price of domestic equivalents.
In return, it would be easier for Solomon Islands' producers to sell their goods in other Pacific markets. However, it would not affect alcohol produced outside the region, such as that from Australia and New Zealand, which would still be taxed more heavily.
Experts from the Pacific Island Forum Secretariat (PIFS) advised ministers that liberalizing the Pacific market for alcohol may reduce shipping costs within the region, and promote trade more generally.
At present, there is little trade between Pacific island countries, which increases the cost of selling goods within the Pacific. Goods from Australia and south-east Asia are shipped in large volumes, making shipment cheaper.
The meeting strongly encouraged the remaining countries that have not announced their readiness to trade under PICTA to complete their arrangements as soon as possible, and to consider the possibility of extending the agreement to the French and US overseas territories in the region.