Vanuatu

Foreign economic and trade relations

1. Trade relations
Total trade volume
According to statistics from the Vanuatu National Bureau of Statistics, the total trade volume in Vanuatu in 2019 was approximately 41.397 billion watts, a year-on-year decrease of 9.1%. Among them, the total import volume was 35.945 billion watts, a year-on-year decrease of 6.8%, and the export volume was 5.452 billion watts, a year-on-year decrease of 21.5%. The trade deficit was 30.493 billion watts, a year-on-year decrease of 3.7%.

Trading partners
Vanuatu's main trading partners are countries and regions such as Australia, New Zealand, Singapore, China, Fiji, Japan, the European Union, France, Hong Kong, and New Caledonia.

Trade Structure
Vanuatu's trade in goods has maintained a deficit for consecutive years. Vanuatu's exports are mainly agricultural and sideline products, with main advantageous products such as coconuts, cocoa, beef, cowhide, and kava. Due to production capacity limitations, the export volume is relatively small. Industrial products, consumer goods, processed foods, rice, noodles, oil, fuel, electrical appliances, building materials, textiles, and other industries heavily rely on imports. In 2016, Vanuatu exported 6056 tons of coconut oil, a year-on-year decrease of 7.8%; The export value was 579 million watts, a year-on-year decrease of 29.9%. Coconut oil exports occupy tiles
Nuatu accounted for 10.6% of its total exports that year. According to the latest data from the World Bank, agricultural products accounted for 83.2% of the main products exported by Vanuatu in 2018, crude oil and mineral products accounted for 1.5%, and manufactured products accounted for 7.8%. Among the main products imported by Vanuatu, agricultural products account for 24.2%, crude oil and mineral products account for 17.3%, and finished products account for 48.2%.

Service Trade
According to the latest data from the World Trade Organization, Vanuatu's service exports amounted to 360 million US dollars and service imports amounted to 160 million US dollars in 2017. Among them, Vanuatu's transportation service exports account for 12.3%, and tourism service exports account for 82%; Transportation services account for 60.3% of imports, while tourism services account for 17%.

Average tariff
According to WTO data, the average tariff in Vanuatu (excluding agricultural products) is 16.36%.

2. Radiation market
Vanuatu is a member of the Melanesian Vanguard Group (MSG) Preferential Trade Agreement, which is composed of Vanuatu, Papua New Guinea, Solomon Islands, and Fiji. The agreement stipulates that member countries are entitled to mutual exemption of preferential tariffs on imported products such as beef, tea, and canned tuna.

On May 26, 2016, the 5th Melanesian Pioneer Group Trade Ministers Meeting was held in Port Vila, the capital of Vanuatu. The meeting adopted a new Pioneer Group Free Trade Agreement and a private sector development strategy. The new Pioneer Group Free Trade Agreement includes not only trade in goods, but also new content such as service trade, labor mobility, and cross-border investment. The free trade agreement came into effect on January 1, 2017, and the Melanesian Pioneer Group's sub regional free trade area was officially established.

Vanuatu is a member of the WTO (April 2012) and also a member of the South Pacific Agreement on Trade and Economic Cooperation (SPARTEC), the Lom é Agreement (ACP-EC/LOME IV), the Economic Partnership Agreement (EPA), the Pacific Island Trade Agreement (PICTA), and the General System of Tariffs (GSP). It enjoys preferential treatment for reducing tariffs on exports to developed countries. Vanuatu is also a beneficiary country of tariff preferences provided by the European Union. According to the European Commission in November 2012

The new Generalized System of Preferences (GSP) plan that will be announced will classify 49 countries, including Vanuatu, as the first category of countries. From January 1, 2014 to December 31, 2023, tariff free policies will be implemented for imported products from these 49 least developed countries.

In addition, since 2008, Vanuatu has actively participated in negotiations for the Pacific Closer Economic Relations Agreement, which was officially signed in September 2017.

Starting from November 2014, China implemented zero tariffs on 97% of imported goods from Vanuatu. Vanuatu's radiation market mainly covers the Asia Pacific region, with products mainly exported to Asia Pacific countries such as Australia, New Zealand, the Philippines, and Japan, in addition to neighboring Pacific islands.

3. Absorbing foreign investment
Vanuatu's foreign investment is mainly concentrated in service industries such as trust insurance, law, accounting, finance, tourism, as well as electricity, communication, commerce, and other fields. According to the latest statistics from the Vanuatu Investment Promotion Agency, the number of new foreign investors in the first quarter of 2018 increased from 30 to 46 compared to 2017. In the first quarter of 2018, the proportion of Australian investment in Warsaw decreased from 29% in the previous year to 10% year-on-year; The proportion of China's investment in Warsaw increased from 27% year-on-year in 2017 to 39% in 2018. The proportion of foreign investment in the field of tile is: professional technical services 28%, wholesale and retail 22%, tourism 22%, and construction 16%.
On February 1, 2019, according to the quarterly report of the Investment Promotion Bureau of Vanuatu, in the fourth quarter of 2018, 68 foreign investment certificates, 37 new ones, and 31 changes were issued, with Chinese investment accounting for 41%, making it the country with the highest investment proportion (since the fourth quarter of 2017). In the fourth quarter, foreign investment in accommodation and food services amounted to 7 billion watts, approximately 70 million US dollars, accounting for 70% of the investment, with the highest proportion, followed by investment in professional and technical fields. In the fourth quarter, the top three countries in terms of investment in Brazil were China, Australia, and France, respectively.
According to the 2020 World Investment Report released by the United Nations Conference on Trade and Development, in 2019, Vanuatu absorbed a foreign investment flow of $4100; As of the end of 2019, Vanuatu's stock of foreign investment absorbed was 611 million US dollars. Australia is the main source of foreign investment in Vanuatu (according to data from the Australian Department of Foreign Affairs and Trade, Australia's aid budget to Vanuatu is estimated to be AUD 66.2 million from 2019 to 2020), with foreign investment in Vanuatu's tourism industry accounting for two-thirds, followed by the finance and construction industries. The second largest source of foreign investment in Vanuatu is Japan and New Zealand.

4. Foreign aid
Vanuatu receives about 17% of its GDP from foreign aid annually. The main countries and international organizations that provide assistance to Vanuatu are Australia, New Zealand, the European Union, China, France, Japan, the Asian Development Bank, the European Investment Bank, the World Bank's International Development Association, United Nations agencies, etc. These assistance are generally used for government institutional capacity building, health, healthcare, education, training, public infrastructure, tourism, agriculture, and other fields. As of December 2017, the Vanuatu government has received a total of approximately 347 million US dollars in bilateral and multilateral aid loans, including approximately 250 million US dollars in bilateral loans and 97 million US dollars in multilateral institution loans.

The latest data from the World Bank shows that Vanuatu received a total of 61 million US dollars, 50 million US dollars, and 18.1 million US dollars in various World Bank aid projects from 2015 to 2017. China's aid projects to Vanuatu mainly include the Parliament Building project, the Prime Minister's Office Building expansion project, the Luganville Pier renovation and expansion project, the Coleman Stadium project, the Malapo Academy project, the Tana Malkula Highway project, the Presidential Office, the Ministry of Finance, and the Ministry of Foreign Affairs office building project.

5. China Vanuatu Economic and Trade
China Vanuatu Trade
According to Chinese customs statistics, the bilateral trade volume between China and Vanuatu in 2019 was 91.82 million US dollars, an increase of 16.2% year-on-year. Among them, Chinese exports amounted to 77.25 million US dollars, a year-on-year increase of 21.9%; Imports amounted to 14.57 million US dollars, a year-on-year decrease of 7.1%.
The main categories of goods exported by China to Vanuatu include: ① motors, electrical, audio-visual equipment and their accessories; ② Mechanical appliances and parts; ③ Steel products; ④ Plastics and their products; ⑤ Furniture; Bedding equipment, etc; Lighting fixtures; Activity room; ⑥ Vehicles and their accessories, except for railway vehicles; ⑦ Ceramic products; ⑧ Other textile products, complete sets of items, and old textiles; ⑨ Miscellaneous products Knitted or crocheted clothing and accessories.
The goods imported by China from Vanuatu include fish and other invertebrate aquatic animals, oilseeds, seeds, industrial or medicinal plants, feed, etc.

[Investment in tiles]
According to statistics from the Ministry of Commerce of China, the direct investment flow from China to Vanuatu in 2019 was 2.12 million US dollars; As of the end of 2019, China's direct investment stock in Vanuatu was 122 million US dollars.

[Contract Services]
According to statistics from the Ministry of Commerce of China, in 2019, Chinese companies signed 12 new engineering contracts in Vanuatu, with a new contract amount of 105 million US dollars and a completed turnover of 92.9028 million US dollars. A total of 242 workers of various types were dispatched, with 798 workers in Vanuatu at the end of the year. Newly signed large-scale contracting projects include China Civil Engineering Group Co., Ltd. undertaking the upgrade of Pentecost Road
Renovation projects; Jiangsu Construction Engineering Group Co., Ltd. undertook the construction of the Vanuatu Hotel project, etc. Large scale engineering contracting projects have been completed, including the construction of sections one and two of the runway project for Vanuatu Airport by China Civil Engineering Group Co., Ltd; The first and second phases of the roundabout road restoration project; Jiangsu Construction Engineering Group Co., Ltd. undertakes the construction of the Vanuatu Vila Port Shopping Mall Hotel project; Minmetals 23rd Metallurgical Construction Group Co., Ltd. undertook the construction of the office building project of Noli Manor of Vanuatu Weiji Group.
At present, China and Vanuatu have signed memorandums of understanding on investment and capacity cooperation, infrastructure construction, etc. Chinese companies have not yet invested in and developed overseas economic and trade parks locally.