RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/TON/4
3 November 2000
(00-4629)
Working Party on the
Accession of TongaOriginal:  English
ACCESSION OF TONGA
Questions and Replies
In a communication dated 30 June 1995, the Gove rnment of the Kingdom of Tonga applied
for accession under Article XII of the Agreement Establishing the World Trade Organization (WTO).
At its meeting on 15 November 1995, the General Council established a Working Party
(WT/ACC/TON/2) with the following terms of reference "To examine the application of the
Government of the Kingdom of Tonga to accede to  the World Trade Organization under Article XII
and to submit to the General Council recommendations which may include a draft Protocol of
Accession."  The membership is open to all WTO Members indicating their wish to serve on the
Working Party.
In document WT/ACC/TON/2, Members were invited to submit questions in writing
concerning the foreign trade regime of Tonga.  The initial questions submitted by Members and the
replies thereto provided by the authorities of Tonga are reproduced hereunder.  The attachments
mentioned in this document submitted to the Working Party are listed in document
WT/ACC/TON/4/Add.1 and are available in the S ecretariat (Accessions Division, Room 1126) for
consultation.
_______________WT/ACC/TON/4
Page 2
II. ECONOMY, ECONOMIC POLICIES AND FOREIGN TRADE
2. Economic Policies
(a) Main directions of the ongoing economic policies
Question 1.  
A number of government strategies are described in the document, one of that is ''promotion of
export oriented manufacturing industry". Could Tonga provide detailed information about the
policies that will be used to meet these objectives?
Answer:
The Industrial Development Incentives Act encourages the growth of export oriented
manufacturing industries by the provision of certain duty exemptions for products imported by these
type of industries (see relevant section below).
The Tongatrade established as a 'search engine' for local producers exploring new potential
markets overseas.
Question 2.  
Precise the kind of ''development benefits'' that the three-year rolling programs intents to
distribute to local producers.
Answer:
Development Strategies:
1. Improving Comparative Advantage and Competitive Positions
The proposed policies to improve Tonga's competitive position includes the following:
- Ensure that the exchange rate is appropriate. In this way the price of domestic exports will be
relatively more competitive abroad and thus will generate better returns for local producers;
- Change the basis of indirect taxation from trade taxes to consumption based taxes. This will
make imported raw materials cheaper for local producers and thus lower the cost of
production for them;
- Ensure that company taxes does not raise cost of production unduly for local producers;
- Minimise trade distortions and barriers as these are major problems encountered by local
producers so that risk taking and effort are encouraged;
- Ensure that wage rates are determined by productivity given that high wage rates are
formidable barrier to local producers in terms of the development of competitive export
markets;
- Optimise the price of domestic utilities supply so as to reduce the current unit cost of
production.
2. Facilitating the development and enhancement of the Private Sector
The maintenance of a stable, macro-economic environment, free of foreign exchange
regulations or trade and payment restrictions, is crucial for private investment, both local and foreign
investors.WT/ACC/TON/4
Page 3
In summary, the following will be addressed during the three year rolling program:
- Ensuring a stable, macro-economic environment. This will ensure that price stability is
maintained as well as a competitive cost structure for local producers;
- Ensuring an attractive tax regime for both local and foreign producers;
- Ensuring that the needed services and support to the private sector are available, such as
infrastructure and investment credits;
- Reducing the extent of government involvement, control and influence on economic activity;
this should reduce the extent where human and financial resources are concentrated on the
government sector at the expense of local producers in the more productive sectors;
- Aligning education and training to the needs of the private sector; this will benefit local
producers in terms of matching human resources development to manpower needs;
- Ensuring that bank's lending policies are supportive of private sector development; this will
be an incentive to local producers with financial problems;
- Liberalising trade; this will be eventually reduce cost of production and increase returns for
local producers respectively;
- Supporting the private sector export activities and export market development; essential major
infrastructure should be in place to support local producers as well as export marketdevelopment;
- Providing market and technical information services for potential and local investors;
particularly for small and medium-sized enterprises for whom the cost of gathering such
information is excessive.
3. Rationalizing the services of both Government and Public Enterprises
Broad development policies to be adopted are:
- Rationalize the size of cost of government to avoid the concentration of resources on the
government sector at the expenses of the local producers in the more productive sectors; as
well as to reduce the tax burden borne by local producers which is usually high to support the
cost of government.
- Ensure that a business friendly taxation system is in place to attract local as well as foreign
investors;
- Increase the opportunity for private sector participation in fields presently dominated by the
public sector. This will give producers the opportunity to take over activities that would be
better managed by private sectors;
- Reduce bureaucratic involvement in the private sector decision making, and ensuring a
"business friendly" bureaucracy for all producers.
4. Human Resource Development
One of the emphasis will be on:
- Improving the linkages between the education system and the labour market, and to establish
a more technical orientation in the education system; local producers demand for human
resources will be better met by appropriately educated personnel;
5. Maintaining and Improving Physical Infrastructure
An adequate and well-maintained infrastructure is essential for the development of the private
sector. Emphasis needs to be given to upgrading the present infrastructure and to ensure proper
maintenance. The priorities in the infrastructure sectors should be to:WT/ACC/TON/4
Page 4
- Upgrade the present infrastructures and ensuring proper maintenance; establishment of well
maintained infrastructures are important prerequisites for any endeavours by local producers;
- Remove bottlenecks to growth through quality, ef ficiency, or cost to users of infrastructures;
this will result in a reduced cost of cost and subsequent increase in returns to local producers.
- Increase the degree of competition in the provision of infrastructure services such as power
and telecommunications. This should lower the costs or costs of services for local producers;
and
- Sub-contract work to private sector as far as possible. This will give chances for local
producers to take up activities in which they are capable of being involved in.
6. Improvement of access to government services in rural areas & outer islands
While there will be differences in economic opportunities among the different regions, one of
the government's strategy is to ensure a more equitable distribution of government services in the ruralareas and the outer islands as a basic means of distributing the benefits of economic growth among the
people of various regions of the Kingdom.
With this strategy in place, small local producers in the outer islands should have the benefits
of having access to publicly provided services without having to be penalized as a result of their
remoteness.
7. Raising Domestic Saving
The idea is to mobilize domestic saving to raise the kingdom's capacity to finance its
development activities and to raise the investments in the economic and productive sectors.
With the above strategy in place, local producers should benefit in the long run in terms of
encouraging domestic saving, facilitating private investments, and improving the quality of publicsector investment particularly in the area of export industries.
8. Sustainable Utilization & Management of Natural Resources & the Environment
This will give focus to managing effectively the sustainable utilization of natural resources.
Emphasis will be given to legislation, community awareness and institutional management.
The above will give due consideration to the environment impact of local producers'
development activities.
9. Managing the development of urban areas
Emphasis will be given to institutional management, urban infrastructure; and urban land use
planning. This is in order to introduce a more coordinated inter-sectoral approach and an effective
monitoring system to ensure improving living conditions in Tonga's capital and to overcome
emerging major problems associated with growing urbanization.
Given that Nuku'alofa is the central business area, shopping area as well as industrial area, it
is critical for local producers' economic activities that the above issue is addressed.
10. Employment Creation
In view of the young age population with the majority under the age of 20 the government
will introduce policies to promote employment creation principally through private sector with
assistance where appropriate from the government.WT/ACC/TON/4
Page 5
Emphasis will be given to areas including prov ision of appropriate training for life time
employable skills that are demanded by the labour market particularly the private sector; and provide
effective information to employers to meet their respective needs.
11. Information Technology
Information technology is one of the government's development strategies given that it is an
integral part of almost any organisation whether it be in the public sector, private sector, or NGOs.
Information technology is critical in supporting individual goals and objectives by providing an
opportunity to realise improved organisational efficiency.
Areas of emphasis include:
- Establishment of a government Computer Committee to oversee and coordinate
computer related problems. This committee will collaborate with the private sector on
any computer-related issues.
- Establishing training at all levels to ensure maximum benefits are achieved from IT.
These programs will be extended to benefit local producers in the private sector.
Question 3.  
Can foreign investors also benefit from the "promotion of export oriented manufacturing
activities"?
Answer:
Yes.
Question 4.  
In order to benefit fully from the future WTO membership, Tonga will need to undertake
reforms to ensure that low levels of efficiency in the public sector do not inhibit private sector
development. There are various references in the opening section of the memorandum to the
need for reform of the public sector in the interests of efficiency, good governance and
accountability:
(a) Can Tonga advise what progress has been made in these areas?
Answer:
The reform of the public sector and the privatisation program are dealt with in answer to
question 126 below.
(b) Are there concrete plans for achieving such objectives as corporatisation or
privatisation of government business enterprises and rationalisation of the civil service?
If so, what timeframes are envisaged?
Answer:
Yes, the Government of Tonga had already privatised some of the government owned
businesses and will continue to do so in the future . For more details, see the answer to question 126
below. There are no plans for the rationalisation of the civil service. However, any changes made
necessary by WTO membership will be made.WT/ACC/TON/4
Page 6
Question 5.  
As a future WTO member Tonga will be expected to  have in place a regime that is administered
fully in consistent, equitable and transparent manner. Can Tonga please provide information
on:
(a) Arrangement for publication of trading requirements so that traders and businesses can
familiarise themselves with them?
Answer:
The reform of the public sector and the privatisation program are dealt with in answer to
question 126 below.
All laws and regulations affecting trade are published by the Government Printing
Department and are on sale to the public at prices anyone can afford. Information on laws and
regulations is freely available to the public through our Ministry of Labour, Commerce & Industries(WTO Section).
(b) The extent to which trading requirements are set down in laws and regulations, and the
extent to which discretion is able to be exercised in the application of such
requirements?
Answer:
Government policy is to set down all trading requirements in laws and regulations. Any
residual discretionary powers are exercised by the competent Minister only when required.
(c) Whether there are established procedures for private interests (both domestic and
foreign) to comment on prospectiv e changes in trading regulations?
Answer:
The Tonga Chamber of Commerce represents any interest from the private sector to the
Government. In addition, the Ministry of Labour, Commerce & Industries consult with the Private
Sector (via Government/Private Sector Consultative Committee) when dealing with law reforms
affecting trade.
(d) Whether there are arrangements for privat e interests to seek independent review and
correction of administrative decisions, for example relating to customs administration?
Answer:
All administrative decisions are subject to judicial review under the Supreme Court Act.
Question 6.  
On page 5 of the Memorandum, reference is made  to the government objective of withdrawing
from direct involvement in manufacturing and marketing. The WTO contains provisions
relating to commercial activity of government enterprises, for example under Article XVII ofGATT 1994:
(a) Can Tonga provide more information on the nature and extent of government
involvement in production and marketing?WT/ACC/TON/4
Page 7
 Answer:
Please see answer to question 126 in the section on Privatisation.
(b) Does Tonga have state trading enterprise s which operate under exclusive or special
privileges in relation to imports or exports?
Answer:
No.
(c) Can Tonga complete the questionnaire on State Trading, included as Annex 6 to
WT/ACC/1?
Answer:
None of the state owned enterprises are state trading enterprises as defined by WTO. This
constitutes our response to the Questionnaire.
Question 7.  
Price Controls - Please give a detail of the goods subject to a regulatory price control (HS coding
or SITC if not available, description of goods, minimum and maximum price). Does Tonga plan
to liberalise these prices as part of the accession?
Answer:
Products subject to maximum price control
Commodity Tariff Line Item
Flour 11.02
Sugar 1701.0000
Butter 0405.0000
Margarine 15.17
Baby Milk 0402.1000
Tea 0902.0000
Rice 1006.0000
Coffee 0901.0000
Cocoa 1801.0000
Edible Oils of all types 15.01 – 1516.0000
Cheese and Dripping 15.01
Salt 2501.0000
Infant Food Preparations 19.01
Motor Vehicles 87.04
Motor Cycles 87.11
White Benzene 2710.0020
All Lubricant Oils 2710.0070
Insecticides 3808.1000
Herbicides 3808.3000
Fungicides 3808.2000
All chemicals and fertilisers for
agricultural use3101.0000 – 3105.0000
Motor Vehicle spare parts 87.08WT/ACC/TON/4
Page 8
Products subject to maximum price control
Commodity Tariff Line Item
Liquid petroleum products 27.10
Motor Spirit 2710.0010
Kerosene 2710.0040
Diesel not available
Bread of standard size 1905.1010
Question 8.  
Price Controls can affect the internal sale of imported products by upsetting the competitive
position between imported and domestic products, and they need to conform to Article III of
GATT 1994. Tonga has price controls for a number of products and we would appreciate adviceon the following:
(a) Does Tonga have any plans to reduce the numb er of products that are subject to price
controls?
Answer:
While there has been some discussion of this matter, there are no concrete plans to reduce the
number of goods subject to such control.
(b) Do price controls apply equally to domestic and imported products?
Answer:
None of these goods are produced locally. In practice therefore, price controls are applied
only to imported goods.
(c) What is the basis for selecting the maximum and minimum prices for each product?
Answer:
Only maximum prices are set for each product by Section 5 of Price and Wage Control Act
Cap.133. These were introduced for competition policy purposes in order to protect consumers,
especially low income families, in respect of essential goods.
(d) Do enterprises that are fully or partiall y owned by the Tongan Government operate in
the markets that sell any of these goods? If so  please provide details of market share and
confirm that they operate in conformity with Article XVII of GATT 1994.
Answer:
No, owned/partially owned government enterpri ses do not operate in markets that sell any of
the priced controlled goods.
Question 9.  
Several consumer items are listed in the Fo reign Trade Memorandum as being subject to
minimum and maximum regulatory price controls. The items subject to price controls include
several agricultural products, motor vehicles and spare parts, agricultural chemicals and
petroleum products.WT/ACC/TON/4
Page 9
(a) Please describe how the regulatory price controls applied to import products. Are the
prices controlled at the border or only at the point of sale to consumers? Please describe
any differences in the application of price controls to imported products, as opposed to
domestically-produced goods.
Answer:
Where the Competent Authority has reasonable cause to believe that the cost of goods
imported into the Kingdom after the commencement of this Act has materially altered since the
making of any price order in respect of such goods he may by order or by notice in writing to the
person concerned to prohibit the sale of such goods for such period as will enable him to vary or
confirm the existing price order or to make a new price order in respect of such goods  (Price and
Wage Control Act CAP.113).
The prices are controlled only at the point of sale to the customers and not on importation.
(b) Please list all the products subject to regulatory price controls by tariff line item.
Answer:
Please refer to List in the answer to Question 7 above.
(c) Are all products in the categories subject to price controls or do regulatory authorities
allow some of the products to be sold at market prices? Please describe any terms orconditions that would allow certain products to be exempted from the price controls.
Answer:
All products in the categories are subject to the price controls.
(d) According to Foreign Trade Memorandum, the regulations stipulate minimum and
maximum prices for the listed items. Does  the regulation auth orize the Competent
Authority Committee to institute price controls for any other products? If so, please
identify the products and describe the procedures followed by the Committee to
establish the prices and notify importers.
Answer:
No.
Question 10.  
According to Tonga's explanation on page 7 of the Memorandum on Foreign Trade regime,
Tonga regulates minimum and maximum prices for some items, including flour, sugar, butter
and margarine. Please provide more detailed information.
Answer:
See answer to Question 8.  Flour, sugar, butter and margarine are some of the most basic
foods of average and low income families in Tonga.WT/ACC/TON/4
Page 10
(b) Monetary and fiscal policies
Question 11.  
The information provided in Tables 3 (Gro ss International Reserves) and Table 4 (Trade
Balance) only contains information through 1995. According to the Trade Memorandum, Tonga
had foreign exchange reserves in 1995 equivalen t to T$32.82 million. Given Tonga's reliance on
tourism to obtain foreign currency, please upd ate Tables 3 and 4 with more recent data and
describe the status of Tonga's foreign reserves in light of the Asian economic situation.
Answer:
Official Gross International Reserves
End ofReserve position
in IMF
(T$m)Holdings of
SDR
(T$m)NRBT foreign
exchange holdings
(T$m)Total Official
foreign reserves
(T$m)
1992/93 2.3 0.8 46.1 49.2
1993/94 2.4 0.9 37.6 40.9
1994/95 2.4 0.0 27.6 30.1
1995/96 2.1 0.1 27.6 29.8
1996/97 2.1 0.2 30.6 32.8
1997/98 2.4 0.3 18.6 21.3
1998/99 3.6 0.0 30.5 34.1
Source: NRBT Quarterly Bulletin, 2000.
Trade Balance
End ofExport & re-Exports (fob)
(T$m)Imports (cif) (T$m) Trade Balance
1990/91 14.6 79.8 -65.3
1991/92 22.5 76.4 -53.9
1992/93 17.0 82.7 -65.8
1993/94 23.2 88.2 -65.0
1994/95 18.5 96.2 -77.7
1995/96 18.1 95.0 -76.9
1996/97 15.1 90.0 -74.9
1997/98 12.6 100.7 -88.2
1998/99 12.0 104.9 -92.9
Source: Statistics Department, 2000.
Recent Development in International Reserves
The gross official foreign reserves fell to a record low of $18.8 million during 1998/99.
However, by year-end, it had increased by $12.8 million to $34.1 million compared to $ 21.3 million
a year ago. The increase was due to a number of factors including the deceleration in the growth ofimport payments, the receipt of official aid and other receipts by government.
The import coverage improved to 3.9 months of imports at the end of 1998/99 from 2.5
months of import cover in 1997/98.
The Asian economic situation had minimal impact on the international reserves. The main
impact was on the exchange rate which moved in line with the movement of the basket of currencies
against which the pa'anga is pegged. The reserves were affected more by developments in domestic
credit and by remittances from the US, which grew strongly in line with the growth of the USeconomy.WT/ACC/TON/4
Page 11
(c) Foreign exchange and payments system
Question 12.  
Could you please, in detail, you current regime on payments and on capital movements, and
give, where applicable the reference to your legislation?
Answer:
Tonga has accepted the obligations of Article VIII, Sections 2, 3, and 4 of the International
Monetary Fund's Articles of Agreement as of March 22, 1991 and maintains an exchange system that
is free of restrictions on payments and transfers for current international transactions.
Regulations on trade-related transactions are few in number and straightforward in
application. For outward invisible transactions, individuals may freely obtain foreign exchange from
commercial banks.
The Foreign Exchange Control regulations, Section 2, authorize the Minister of Finance, to
restrict the sending of money out of Tonga but authorisation is usually given if the level of
international reserves is considered adequate and the transaction is considered beneficial to the
Tongan exports. The acquisition of foreign financial assets is prohibited, but this restriction is not
effective both because there is a large volume of informal trade and because the repatriation
requirement is not monitored
Foreign direct investment in Tonga is dealt with in the next section.
Finally, there are regulations on commercial bank's foreign asset positions. Banks are
permitted to hold only working balances in foreign currencies, up to a limit of T$I million. No explicit
limit exists  on foreign exchange liabilities, but provision of forward exchange cover for squash
exporters requires approval of the Ministry of Finance; cover is currently not permitted for imports.
Question 13.  
Can you please indicate in detail your plans fo r changing the regime on payments and capital
movements, and indicate an approximate timetable?
Answer:
No changes to the regime on payments and capital movements are being actively considered
at the time of writing.
Question 14.  
According to the Foreign Trade Memorandum, the convertibility of the Tongan pa'anga is free.
The future plan is to liberate the capital flow and provide a freer convertibility of the Tongan
pa'anga. Please describe all restrictions on th e convertibility of the Tongan pa'anga. How does
the Government of Tonga intend to free further the convertibility of the pa'anga?
Answer:
There are no restrictions on the convertibility of the pa'anga.WT/ACC/TON/4
Page 12
(d) Foreign and domestic investment policies
Question 15.  
The Government of Tonga makes no important distinction between domestic and foreign
investment. What is the meaning of "no impo rtant distinction"? Is there a discriminatory
treatment?
Answer:
Domestic and foreign investment are treated in the same way. There is no discrimination
between them.
Currently, an applicant has to meet requirements under the Industrial Development Incentive
Act, 1978. The procedures are the same for Tongans and non-Tongans alike. The immediate
requirements for submitting application are as follows;
1. Activities/business/industries which qualify for Development Licenses- Manufacturing, assembling, processing.
- Tourism Prime Facilities (Hotel/Motel with accommodations, car rental, sports)
- Engineering service oriented industries such as automobile repair shops, blacksmith
operators, boat repair facilities, Electronic and Electrical Appliances repair.
- Commercial Fishing for Exports.
2. Application Forms
- One (1) signed original plus nine (9) copies.
-  T$200.00 Development Licence Application Fee.
3. Resume and background information on all Shareholders. There should include
references from current or previous employers, partners, business associates, banketc.
4. References on experiences relative to the proposed area, formal qualifications etc.
5. Financial statements or bank references indicating capital availability.
6. Business plan covering the following:
- Proposed production, products etc.
- Market Prospects
- Finance
- Personnel arrangements
- Location/Land Lease
- Cash flow projection for the first three (3) years of operation.
7.    In case of a Tourism Prime Facility, construction plan duly approved by the Ministry
of Health and Ministry of Work will need to be submitted.WT/ACC/TON/4
Page 13
Question 16.  
In case of foreign investment, are objective cond itions to determine if there are substantial and
continuing benefits to the people and economy of Tonga laid down in a law or does the
government have a margin of discretion?
Answer:
While the Act lays down a number of  conditions, the Government does have a margin of
discretion. In practice foreign investment is encouraged in the sectors covered by the Act and licenses
are freely granted.
Question 17.  
Does domestic investment also satisfy the same conditions?
Answer:
Yes.
Question 18.  
Are the benefits granted from a development license the same for domestic and foreign
investment?
Answer:
Yes.
Question 19.  
Could you clarify if an already established enterprise has to be consulted and if it has to consent
before to deliver a development license for a new industry engaged in similar activities or not?
Answer:
No, consultation with an already established enterprise engaged in similar activities is not
needed when delivering a development licence for a new investment.
Question 20.  
Does the Industrial Incentives Act provide with an appeal procedure against non-successful
application for a development license?
Answer:
While it is not stated in the law, an appeal can be made to the Minister for Labour, Commerce
and Industries.
Question 21.  
In relation to the Industrial Development Incentives Act:
(a) Can Tonga indicate how successful it has been  in its stated objectives of encouraging the
growth of industry and tourism in Tonga.WT/ACC/TON/4
Page 14
Answer:
Taking 1998 as an example, 68 projects re presenting proposed investments of almost
T$ 14 million were approved during the year. For details, see table below.
Sectors No. of Projects Proposed Investment Proposed Employment
Manufacturing 24 6,486,423.75 114
Tourism prime facility 17 2,605,000.00 64
Engineering 1 229,000.00 18
Commercial Farming 19 909,000.00 300
Commercial Fishing 7 3,736,000.00 54
Total 68 13,965,423.75 550
(b) For example, is there any statistical evidence on the success rate of businesses which
receive development licenses?
Answer:
As of 1998, 1,104 investment licenses had been issued. This led to the establishment of 860
operational businesses and to the setting up of 212 businesses which subsequently closed down. 32
licenses had not yet been implemented.
(c) What is the impact on private sector development of the discretionary nature of
decision-making under the scheme?
Answer:
The discretionary nature of decision making under the scheme has not had a negative impact
on private sector development because in practice the Screening Committee grants applications if therequired information is supplied.
(d) Are there any concrete plans to review the Act?
Answer:
Yes, the IDI act is currently under review for more standardisation and transparency.
Question 22.  
Under Tonga's Industry Incentive Act, any p erson intending to establish an industrial
enterprise needs to apply for a development license. Tonga's memorandum states that ''both
domestic and foreign investment are subject to the same approval procedure". This appears to
be contradicted in the next sentence, where an  application that involves foreign investment
needs to satisfy a committee on a series of criteria. Some of these criteria appear to be trade
related,  and may be inconsistent with Article III of GATT 1994 and WTO Agreement on trade-
related Investment Measures. Can Tonga please provide further explanation on:
- The need to involve processing of local resources?
- The need to contribute substantial local added value?
- The need to contribute to import substitution?WT/ACC/TON/4
Page 15
- The need to satisfy any other criteria that the committee thinks is relevant. (This is a
very general criterion that lacks transpar ency and appears to provide the committee
with large discretionary power that could  result in denial of national treatment).
- In the list of benefits granted from a development license, non-resident companies or
shareholders are allowed to repatriate profits and capital gains. Is there a time limits onthis benefit, if so what is it? What are the rights of non-resident companies and
shareholders that do not have a development license in respect of repatriation of profits
and capital gains?
Answer:
The IDI Act of 1978 requires the Standing Advisory Committee to examine the extent to
which the project  will contribute to the objectives laid down in the Act, including the objectives listed
above. However,  in recent years the Committee has not used these criteria to determine whether ornot a licence is to be granted because it welcomes all foreign investment in the sectors covered by the
Act. The legislation is currently being reviewed in or der to bring it into line with this current practice.
Question 23.  
According to the information provided in the Foreign Trade Memorandum the Industrial
Development Incentives Act 1978 grants broad di scretionary authority to the Standing Advisory
Committee on Industrial Licensing to approve applications for foreign investment.  Similarly,
the right to repatriate profits and capital gains is also conditioned on obtaining a Development
License.  Some of the factors considered in evaluating whether or not to approve an application
for the license, such as contributing to import substitution and export potential, would appear
to be inconsistent with the WTO TRIMs Agreement.
How does the Government of Tonga intend to amend the Industrial Development Incentives Act
of 1978 to bring it into conformity with WTO TRIMS Agreement?
Answer:
We understand the TRIMs Agreement to deal with measures which are contrary to either
GATT Article III, paragraph 4 or Article XI, paragraph 1. The IDI Act does not, as we understand it,contravene either of these provisions. The IDI Act is being reviewed with a view to its amendment -
see answer to Question 22.
Question 24.  
Some of the benefits described on page 10 of th e English language version of the Foreign Trade
Memorandum, such as exemption from income tax for up to five years; exemption from the
withholding tax for the same period; accelerated depreciation of assets, customs duties
exemptions on imported goods; a 50 per cent exemption from the Port and Services Tax, to theextent they are contingent on export performan ce or import substitution, would also appear to
violate the WTO Agreement on Subsidies and Countervailing Measures.
How does the government of Tonga intend to amend the Industrial Development Incentives Act
of 1978 to bring it into conformity with the WTO Agreement on Subsidies and Countervailing
Measures?WT/ACC/TON/4
Page 16
Answer:
These benefits are not contingent on export performance or on import substitution.  Many
WTO Members have similar measures.
Question 25.  
On page 8 of the Memorandum it is stated that  "it is intended to identify government services
which can be privatised".  Can Tonga advise:
- what specific plans are in place to achieve such privatisation?
- Over what time period is such as objective likely to be achieved?
Answer:
Please refer to answers in Question 126.
(e) Competition policies
Question 26.  
Tonga does not have a competition policy .  Are there any plans to introduce one?
Answer:
Tonga has no plans to introduce a competition policy.
Question 27.  
Appropriate trade and competition policies are mutually supportive, both aiming to improve
efficiency and welfare.  While there is no WTO requirement for Tonga to have a competition
policy, we would be interested to know whether Tonga has any plans in this area?
Answer:
Tonga has no plans to introduce a competition policy.
3. Foreign Trade in Goods and Services
Question 28.  
According to the foreign Trade Memorandum, over 46 per cent of government revenue was
expected to be derived from customs duties and the Port and Services Tax in 1996/1997.  Please
identify the other major sources of government revenue.
- Income tax
- Excise and sales taxes
- Entrepreneurial and property income
- Administrative fees and charges
How does the Government of Tonga intend to offset revenue losses that may result from lower
customs duty rates?WT/ACC/TON/4
Page 17
Answer:
A program is still under examination. Please see section on customs tariff below, including
Question 48.
4. Domestic Trade in Services
Question 29.  
Services represent 53 per cent of GDP but there is no services policy.  Please clarify.
Answer:
There is no overall services policy. Policies apply to Individual services sectors (e.g. tourism
and civil aviation).
Question 30.  
As the services sector of Tonga accounts for over 50 per cent of Tonga's GDP, we would be
interested to know whether Tonga is contemplating a comprehensive services policy, and if so,its likely main features?
Answer:
No such comprehensive policy is contemplated.
III. FRAMEWORK FOR MAKI NG AND ENFORCING POLICIES AFFECTING
FOREIGN TRADE.
1. Powers of Executive, Legislative and Judicial Branches of Government
Question 31.  
Does the governors of Ha'apai and Vava'u or any other sub-central entity have any authority to
regulate trade in any way or to impose any taxes?  If so, please specify.
Answer:
No, Clause 55 of the Constitution stipulates that Governors cannot enact any law but that they
are responsible for the enforcement of laws in his district. Further to this, only central government can
increase or decrease taxes and/ or customs duties.
2. Government entities Responsible for Making and Implementing Policies Affecting
Foreign Trade
Question 32.  
Please provide the list of restricted items th at needs an import license from the Minister of
Finance and from the Minister for Police, Fire Service and Prisons.
Answer:
Please answer to Question 62.WT/ACC/TON/4
Page 18
Question 33.  
What process will be needed to complete national procedures relating to WTO accession?  Will
implementing legislation be required?
Answer:
Implementing legislation will be required.
Question 34.  
In order to meet its obligations as a future WTO member and to draw maximum benefit from
its membership, Tonga will need well establ ished arrangements for the development and
coordination of trade and economic policy:
(a) How effective are the means for considering and coordinating policies affecting foreign
trade between government agencies, and between the government and business?
Answer:
The Government has established a Trade Coordination Committee to coordinate the work of
the different Government entities involved (Ministry of Labour, Commerce & Industries, Ministry of
Finance, Ministry of Agriculture & Forestry, Cent ral Planning Department, National Reserve bank of
Tonga, and Ministry of Fisheries) under the chairmanship of the Minister of L,C & I. This committee
also consults with the private sector on matters relating to trade and economic policy.
(b) Can private sector views be more closely reflected in policy formulation
Answer:
Yes, private sectors view is taken into account in policy formulation .
4. Legislative Programs
Question 35.  
Does Tonga intend to submit to the WTO Wo rking Party members for comment the revised
legislation related to customs and excise whilst it is still in a draft form?
Answer:
The Customs and Excise Act has already entered into force on 11 October 1999. A copy has
been supplied to the WTO Secretariat (WT/ACC/TON/4/Add.1 refers).
IV. POLICIES AFFECTING TRADE IN GOODS
1. Import Regulation
(a) Registration
Question 36.  
With a few exceptions, imports are permitted withou t restrictions.  Please provide a list of those
exceptions.WT/ACC/TON/4
Page 19
Answer:
Please see answer to Question 62 below in the section on Quantitative Import Restrictions.
Question 37.  
Can natural persons engage in importation activities?  If not, why not?
Answer:
Yes, they can.
Question 38.  
Please identify the business activities that require a license to import goods, pursuant to the
Licenses Act, Cap. 47.  Is the decision to issue the license discretionary?  Please describe the
criteria that are considered in the determination of whether or not to grant a licence to import
goods.
Answer:
Every business requires a licence to operate. There is no discretionary power to issue the
licence, it is a simple 'pay-and-serve' process is which you pay for your licence fee and the licence is
issued to you. There are no criteria not to issue licence.
(b) Customs tariff
Question 39.  
What is the status of the current legislatio n to implement the HS 96 customs classification
system?
Answer:
The HS was implemented on 1 May 2000.
Question 40.  
Could Tonga please provide a copy of its SITC tariff schedule.  (note:  It is not contained in
Annex II of WT/ACC/TON/3, as indicated. end note)
Answer:
Available in the Secretariat for consultation (WT/ACC/TON/4/Add.1 refers).
Question 41.  
Please provide copies of applied rates of customs duty on diskette together with import statistics
on a tariff line basis.
Answer:
Available in the Secretariat for consultation (WT/ACC/TON/4/Add.1 refers).WT/ACC/TON/4
Page 20
Question 42.  
It is important that Tonga implement a customs classification system that is in line with the
international standard (the Harmonized Syste m) and we note that the proposed changes to
Tonga's tariff classification system detailed in the foreign trade regime have not passed through
parliament:
- our understanding is that the current system of classification creates a significant
obstacle to the efficient operation of Ton ga's customs administration.  Is this correct?
- to what extent do customs officials have discretionary powers in assessing duty on
imports?
- With the rejection by the legislative Assembly  of the legislation for a harmonized tariff
schedule, what plans are there to modernise Tong's tariff structure?
- We would hope to see Tonga's tariff levels  reduced in the context of WTO accession.
Given the importance trade taxes have come to assume in government revenue, what
plans does Tonga have for diversifying the revenue base?
Answer:
HS was implemented on 1 May 2000. For question on customs valuation, please see relevant
section below. Two studies have been undertaken on the reform of the taxation system. The next stepis to study the impact of the proposals contained in these studies on the economy and government
revenue.
Question 43.  
According to page 14 of the Memorandum on fo reign Trade Regime, Tonga will introduce the
Harmonized System (HS).  The action plan to join the HS agreement should be clearly
explained. Will the initial offer that Ton ga submits later be based on the HS 1996?
Answer:
HS was implemented on 1 May 2000. Tonga's initial tariff offer will be based on the HS
system.
Question 44.  
Is the harmonised system already introduced?  If  not, when does Tonga intend to introduce it?
Answer:
HS was implemented on 1 May 2000.
Question 45.  
Tonga imposes quite substantial tariff barriers.  The reason for these tariffs appears to be to
raise revenue rather than protection of domestic  competition.  What other forms of raising
government revenue could be considered?WT/ACC/TON/4
Page 21
Answer:
Establishing a system under which users pay for services rendered by the Government.
Broadening of the sales tax base
Question 46.  
It is said; "Tonga charges excise duty of 50 per cent or T$0.75 per li tre on beer produced in
Tonga" (at present only product on which excise duty is levied).  Is it a correct understanding
that no excise duty is charged on imported beer?
Answer:
Beer made from malt in Tonga attracts excise duty at T$0.75 per litre. Imported beer made
from malt attracts a rate of import duty of 200% or T$2.40 per litre, whichever provides greater
amount.
Question 47.  
Why does Tonga stipulate high tariff rates on tobacco (150 per cent or T$15/kg) and spirits (300
per cent or T$35/1)? Why does Tonga levy excise duties only on beer?
Answer:
High tariffs on tobacco & spirits are applied for both revenue and health reasons. The duty on
imported beer also gives protection to the local producer.
Question 48.  
We note from the memorandum that the Ministry of Finance intends to implement a reform
program that includes trade taxes.  Could Tonga provide details of this program and include
information on any taxes that are to be intr oduced, removed or have their base broadened?
Answer:
This matter is still under examination, but no specific proposals have yet been made. Any
program will take into account the implications of accession to WTO.
(c) Tariff quotas and exemptions
Question 49.  
Are tariff exemptions applied on an MFN basis?
Answer:
Yes.
Question 50.  
Can Tonga confirm that it does not intend in the future to introduce import quotas?
Answer:
Tonga has no such intention.WT/ACC/TON/4
Page 22
Question 51.  
Certain imported products are granted exemption from custom duties.  Among these is airport
ground equipment; fuel and lubricants for international air services; marine lifesaving
equipment and patters and samples.
(a) Please  provide a listing of the HS and/or SITC numbers for the products exempt from
duty.
Answer:
Description of Goods which are subjected to duty exemptions.
These are defined by HS number in only a few cases.
1. Goods required for the use of the reigning sovereign.
2. Goods required for the use of the Government of Tonga.
3. Goods required for the accredited diplomatic representatives to the Kingdom of Tonga
International Organisations and Technical assistance officials.
4. Goods required under agreements of technical assistance entered into Government of Tonga.
5. The furniture, effects and equipment (including a motor car) of officials in the service of
overseas government or international organisations if imported within six months from the
date when the official takes up appointment or within such further period as the Controller ofCustoms may allow, on proof that the right to import such furniture effects and equipment
free of duty has been authorized by agreement between the overseas government or
international organisation concerned and by the Government of Tonga. Personal and
household effects and baggage of arriving passengers.
Personal effects of passengers being accompanied baggage of passengers passes as such by
the proper officer of customs consisting of:
6. A reasonable quantity of wearing apparel, articles of personal adornment and toilet
requisites;
7. Instruments and tools to be used by the passenger for the purpose of his profession, trade
occupation or employment provided that they have been in his possession and bona fide usefor reasonable period;
8. Such articles in his baggage or his personal (not including firearms and ammunitions) which
he might reasonable be expected to carry with him for his regular and private use whilst
travelling;
9. Manufactured tobacco (for the personal use of passenger), including cigars and cigarettes not
exceeding 500 grams aggregate (500 cigarettes shall be deemed to be equivalent to 500 grams
of tobacco) imported by a person above the age of 16 years.
10. 2.25 litres of portable spirits or 4.51 of beer imported by a person above the age of 18 years or
any combination not exceeding half of each of the quantities specified herein:WT/ACC/TON/4
Page 23
11. Articles (including foodstuffs), which would otherwise be dutiable but for this provision, the
aggregate value of which does not exceed $500.00
12. The items referred to in heading No. 9805.14 and heading No. 9805.15 above may also be
purchased by disembarking passengers at the du ty free shop at Fua'amotu Airport, prior to
passing through customs
13. Household effects admitted as such by the Collector of Customs which accompany a person
intending to take up residence in the Kingdom and are proved to the satisfaction of the
Collector of Customs to have been in bona fide use by such person for a reasonable period
and are not imported for disposal to a third party; Provided that a person may import
household effects under this sub-paragraph only on the occasion of first taking up residence in
the Kingdom.
14. Baggage and household effects in the case of a person intending to take up residence in the
Kingdom) imported within six months of the arrival of the passenger or such further period as
the Controller of Customs may allow provided that the articles would have been exempted
from duty had they been imported under items 9805.1000, 98051100, 9805.1200 and
9805.2000 hereof; provided that the exemptions in 9805.1000, 9805.2000 and 9805.3000
hereof shall not apply to a member of the crew of an aircraft unless such person is finallyleaving the aircraft or vessel on arrival in the Kingdom.
15. Personal effects (excluding merchandise…alcoholic beverages and tobacco products) of
persons ordinary resident in the Kingdom who have died abroad.
Ground Equipment and fuel to aircraft
16. Ground equipment and technical supplies required for use within the limit of an airport in
connection with the establishment or maintenance of international air services or air services
operation within the kingdom.
17. Fuel and lubricants solely for use in aircraft specified in 9807.1 hereof.
Cultural and educational articles
18. Articles of an educational, scientific or cultural nature of the following description being
products of any state which is a party to the agreement on the importation of educational,
Scientific and Cultural materials approved by the general conference of the United Nations
Educational, Scientific and Cultural Organisation during its Fifth Session at Florence in June
1950, subject to the satisfaction of the Controller as to their description and use.
19. Books, documents, (printed or produced by duplicating processes, but excluding stationery),
periodicals, current newspapers, manuscripts (including typescripts), musical compositions,
maps and charts;
20. Paintings and drawings (excluding manufactured wares), hand-painted impressions signed
and numbered by artist, original works and of art of statuary or sculpture; collectors' pieces
and objects of art consigned to approved public galleries, museums and other public
institutions and not intended for re-sale: antiques more than one hundred years old;
21. Films, slides and sound recordings;22. Architectural, industrial and engineering plans, models, wall charts and scientific instruments
and apparatus:WT/ACC/TON/4
Page 24
23. Provided that articles specified in 9808.13, 9808.14 above (except news reels with or without
sound tract) may only be imported free of duty by a person, society or body approved for that
purpose by the Controller of Customs.
24. Specific materials and equipment, not including those articles specified in 9808.1 above, to be
used solely in educational institutions, for educational purposes in accordance withprocedures agreed by the Minister of Education and the Controller of Customs and approved
by the Privy Council.
Charitable gifts
25. Goods donated to the Red Cross Society and certified by the person for the time being in
charge that they are for free distribution.
26. Goods imported as charitable gifts, admitted as such by the Collector of Customs, by any
organisation approved by the controller of customs and certified by the head of suchorganisation that such articles are for free distributions.
Marine life saving equipment
The following equipment which the Collector of Customs is satisfied is required for the
purposes of  ships and shipping
27. Life saving equipment, including life jackets, life buoys, buoyant apparatus, sea making dye,
distress flares, rockets and other pyrotechnic devices for use in life saving;
28. Communication and signal equipment, including Morse signalling lamps, code flags,
semaphore flags, fog horns and sirens.
Patterns, samples, advertising matter and documents
29. Patterns and samples cut, mutilated or otherwise spoiled to the satisfaction of the Collector of
customs so as to render them unmerchantable and show cards, calendars, trade catalogues,
price lists and printed posters advertising services and goods offered by the firms having no
established place of business in the Kingdom;
30. Waybills, consignment notes, bills of lading, exchange orders, tickets and labels when
imported on behalf of shipping companies and air lines domiciled outside the kingdom.
Religious goods for use in places of worship, tombstones
31. Altar bread and altar wines imported for administering the Sacrament; on the signed
declaration of the head of the denomination for which they are intended;
32. Church bells, on the signed declaration of the head of the denomination for which they are
intended;
33. Tombstones whether engraved or not and commemorative and memorial tablets to a deceased
person.
Trophies and medals
34. Cups, medals, shields and similar trophies when  awarded abroad, provided that the purpose
for which the trophy was awarded is indelibly inscribed thereon.WT/ACC/TON/4
Page 25
35. Cups, medals, shields and similar trophies approved by the Privy Council to be specially for
bestowal as honorary distinctions or prizes provided that the purpose for which the trophy is
to be awarded is indelibly inscribed thereon.
36. Unframed portraits, developed photographs, developed negatives, developed films and sound
recordings which the Collector of Customs is satisfied have only a personal or sentimentalvalue to the importer and which are not intended for sale or for public exhibition or
performance.
37. Articles and goods imported for objects of a general public character or beneficial enterprise
approved by the Privy Council.
(b) Why do these and other products qualify for custom duty exemptions?
Answer:
These are the sort of items that are granted exemptions in many countries.
(c) How does the government determine which products qualify for exemption and are such
exemptions available administratively, or is legislation necessary?
Answer:
Exemption is granted according to the Customs and Excise Act. No exemption is available
administratively.
(d) Other duties and charges, including charges for services rendered
Question 52.  
Please identify all products subject to the 20 per cent Port and Service Tax.
Answer:
Port and Service Tax is applied to all imported goods except those that are fully and partially
exempted under the IDI Act.
Question 53.  
Could Tonga please provide a copy of the License s Act (Cap.47) and the Port and Services Tax
Act (Cap. 71)?
Answer:
These have been supplied to the WTO Secretariat (WT/ACC/TON/4/Add.1 refers).
Question 54.  
A list of wharfage dues are provided for boats, machinery, motor vehicles and several other
products.  The rates are given in T$ per meter.
(a) Please explain the rationale for levying such fees based on length and/or internal space.WT/ACC/TON/4
Page 26
Answer:
Due to the relatively small area of operation at the wharf, 'space' (length in cubic metres) is of
great importance. Hence, by measuring fees in comparison to the space it (each product) takes up at
the wharf is the result.
(b) Is the list of products subject to wharfage dues comprehensive?  If not, please provide a
full listing of dues by products.
Answer:
These have been supplied to the WTO Secretariat (WT/ACC/TON/4/Add.1 refers).
(c) Please provide a copy of the Wharves Act (Cap.38)
Answer:
This has been supplied to the WTO Secretariat (WT/ACC/TON/4/Add.1 refers).
Question 55.  
Are there any other types of customs charges app lied to imports and exports other than the Port
and Services Tax and the wharfage dues listed?
Answer:
The Port and Services Tax is the only tax collected by Customs other than the import duty. In
WTO terms, it is an "other duty or tax" and the relevant provision is Article II of GATT 1994.
Wharfage dues are not collected by the Government but by the Port Authority, a company
which also collects berthage fees ( see answer to question 58 below). These are purely commercial
charges.
Question 56.  
Certain imported products are exempt from Port and Services Taxes.  Among these are
educational, scientific and cultural books, documents and materials; fertilizers; insecticides,
pesticides and fungicides for agricultural use; agricultural machinery, implements and tools;
timber milling machinery; and stock feed and seeds.
(a) Please provide a listing of the HS and/or SITC numbers for these products.  Why do
these and other products qualify for Port and Services Tax exemptions?
Answer:
The main reason why they qualify for an exemption is because they are essential items.
These have been supplied to the WTO Secretariat (WT/ACC/TON/4/Add.1 refers).
(b) How does the government determine which products qualify for exemption?  Are the
exemptions granted administratively, or is legislative action necessary?
Answer:
The exemptions are provided legislatively.WT/ACC/TON/4
Page 27
Question 57.  
GATT Article VIII provides that all fees and ch arges will be limited in an amount to the
approximate cost of the services rendered and will not be a taxation of imports for fiscal
purposes.  It appears that port services tax of 20 per cent and wharfage dues are not directly
related to the cost of any particular customs service, but purely revenue generators. How doesthe government of Tonga intend to bring its import  licensing fee structure into conformity with
the requirements of GATT Article VIII?
Answer:
Please see answer to Question 55 above.
Question 58.  
Could Tonga provide details of the import charges applied by Port Authorities and explain the
difference between the wharfage and the Port and Service Tax? What services does they cover?Which products are concerned?
Answer:
The Ports Authority levy berthage fees on all overseas vessels including General Cargo,
Fishing, gas Carrier, Tankers, Squash Pumpkins Vessel etc., and calculation is based on tonnage times
hours at berth times the rate as listed under Section 12 (2) of Ports Authority Act or Standing Order1999. These charges cover the use of berth and all associated fixtures, facilities and services
including:
- Berth/anchorage; fender; bollard; channel depth; roads; security fence;
- Lightning, stacking area; pollution control etc.
The Ports Authority also charged Wharfage on all import cargo and exports passing through
the International Port of Queen Salote Wharf. Such charges include wharfage or TOP $22.00 on
petroleum products in bulk per 100 litres or part thereof, TOP$110.00 as terminal fee per container
and TOP$4.30 as terminal fee per ton (the greater the weight or measurement)
The Port and Services tax is an ad valorem tax of 20%  levied on all imports. Please see
answer to questions on this tax above.
Question 59.  
Please provide more detailed information on Port and Service Tax.  Is the tax levied in addition
to customs duties?  Why does Tonga keep the 20 per cent ad valorem Port and Service Tax?
Answer:
Yes, Port and Service Tax is levied in addition to customs duties. This was introduced for
revenue purposes and not to protect domestic production. In addition, given the very small scale of the
Tongan economy and the level of economic development of the country, it has not had a protectiveeffect.WT/ACC/TON/4
Page 28
Question 60.  
The WTO permits the imposition of fees for servic es rendered provided that the fee is no higher
than the actual cost of the service.  The port s and services tax does not appear to meet this
requirement, and we would hope to see its rem oval as a feature of Tonga's WTO accession:
- Could Tonga provide further information on the tax, in particular which goods are
subject to the tax and which are exempt?
- Does Tonga regard the tax as a service fee or simply a charge on imports that is
additional to the tariff?
- Has any substantive consideration been given to reviewing the tax?
Answer:
Please see answers to questions on this subject above.
Question 61.  
Is all kind of machinery subject to wharfage duties?
Answer:
Yes.
(e) Quantitative Import Restrictions
Question 62.  
How does the government determine which products qualify for quantitative  restrictions or
restrictive licenses. Please provide a listing of a ll such products along with their HS and/or SITC
number.
Answer:
The Government has included items on the "restricted list" for a number of reasons, including
to protect public morals, human, animal or plant life or health, protection of trade marks and
copyright. Some items have been included on the "r estricted list" only to monitor their import, for
instance motor vehicles.
(a) List of PROHIBITED Imports.
1) Counterfeit coin, currency notes or stamps.
2) Indecent articles (obscene books, paintings, drawings, cards, lithographic or other engravings,
photographs, prints, films or other indecent products or articles except for private purposes)
[Schedule II, Part 1 (Section 35) PROHIBITED AND RESTRICTED IMPORTS]
3) Goods bearing the royal Arms of the Kingdom of Tonga, unless importers holds his Majesty's
authority.
4) Goods bearing any trade name or trade mark being or claiming to be the name or trade mark
registered under the Registration of United Kingdom Trade Mark Act.
5) Fireworks, unless given permission by Minister of Police.WT/ACC/TON/4
Page 29
6)  All books and any written or printed matter, sounds and visual recordings subject to
copyright law.
7) All books and any written or printed matter and sound and visual recordingswhich advocate
violence, lawlessness or disorder.
8) All toxic or hazardous wastes.9) Goods the importation of which is prohibited by any other law in force in the Kingdom.
10) Goods the importation of which is restricted by any other law in force in the Kingdom except
in accordance with such law.
(b) List of RESTRICTED Imports.
1) Firearms and ammunition except with a licence issued by the Minister of Police (HS No. :
93.03)
2) Explosives of all kinds including fuses and detonators except with licence issued by the
Minister of Police (HS No. : 3602.0000)
3) Noxious, stupefying or tear gas in any form a nd all weapons and instruments or appliances for
firing or using such gases and gas containers or cartridges for such weapons or other
instruments or appliances except with the written permission of the Minister of Police.
4)  (a) Brandy and whisky unless certified to the satisfaction of the Collector that it has been
matured in wood for three years. (HS No.: 2208.3010)
5) Rum unless certified to the satisfaction of the Collector that it has been matured in wood for
two years. (HS No.: 2208.4010)
(a) Motor vehicles (HS No.: 87.04), motor cycl es (HS No.: 87.11) and motor scooters except
with a licence issued by the Minister of Finance.
6) Left hand drive motor vehicles except with a licence issued by the Minister of Finance and a
licence issued by the Minister of Police.
7) Eggs except with a licence issued by the Minister of Finance. (HS No.: 0407.0010)
8) Cabin and ships biscuits except with a licence issued by the Minister of Finance.
9) Goods the importation of which is restricted by any other law in force in the Kingdom except
in accordance with such law.
Question 63.  
Import in Tonga of indecent articles, fireworks  and seditious matter is prohibited. Can Tonga
explains how it defines what an indecent article is? Does Tonga manufacture its own fireworks?
In that case, then any ban on imported firewo rks would be contrary to Article XI of GATT
1994.  Is the definition of seditious matter laid down in a law or does the government authorities
have a margin of discretion?WT/ACC/TON/4
Page 30
Answer:
The terms "Indecent Articles" and "Seditious Matt er" are defined in accordance with the usual
dictionary definition. Pornography is, for instance included. Tonga does not manufacture its own
fireworks.   
Question 64.  
What is the current status of the legislation to revise the quantitative restrictions on imported
eggs and cabin and ships biscuits?
Answer:
These restrictions still remain in place.
Question 65.  
Article XI of GATT 1994 and the WTO Agriculture Agreement do not allow the imposition of
import restrictions for the purpose of protecting local industries.  Can Tonga advise theoutcome of the revision to import arrangements for eggs and cabin and ships biscuits?
Answer:
As per Question 64.
Question 66.  
Please explain why both right and left-hand driv e motor vehicles are listed as being subject to
quantitative restrictions.
Answer:
These items are on the "Restricted List" in orde r to monitor imports for road safety reasons.
Import licenses are freely available unless the vehicles are unsafe.
Question 67.  
Imports of certain other products are restricted and require separate licenses in addition to
import licenses. For example, alcoholic products such as brandy, whisky and rum.  Why are
there such restrictions?
Answer:
These restrictions were introduced many years ago for health reasons.
Question 68.  
Why does Tonga have quantitative restrictions  on brandy, whisky, rum and motor vehicles?
Will these restrictions be removed once Tonga accedes to the WTO?
Answer:
Please see answers to questions above. Tonga is prepared to review these measures taking
into account the views of WTO Members.WT/ACC/TON/4
Page 31
(f) Import licensing procedures
Question 69.  
Annex III of the Memorandum on Foreign Trade  li sts different fees charged to issue an import
licence, which vary with the nature of the goods to be imported.  The information provided in
Annex III also states that the principal purpose of the import licensing system is to raise
revenue for the Government of Tonga.  GATT Article VIII provides that all non-tariff import
fees and charges shall limited in amount to th e approximate cost of the services rendered and
shall not be a taxation of imports or exports for fiscal purposes.  Article 1:2 of the Agreement
states that licensing procedures shall be in conformity with GATT provisions.  It appears
however, that the different licensing rates are simply revenue generators.
- What is the GATT justification for having processing fees at different rates?
- How does the Government of Tonga intend to bring its import licensing fee structure
into conformity with the requirements of GATT Article VIII?
Answer:
There is no specific GATT justification. The Government of Tonga is prepared to review
these matters, taking into account the views of WTO Members.
Question 70.  
According to the information provided in A nnex III of the Memorandum on Foreign Trade,
where applications for import licenses are lo dged by non-Tongans, the issuance of import
licenses is not automatic.  Each application is considered by a trading licenses screening
committee. The use of discretionary import licensing procedures is a quantitative restriction
incompatible with th e requirements of GATT Article XI. Such a separate screening system
would appear to be discriminatory.  Why is the process of receiving an import licence not
automatic for non-Tongans?
How does the Government of Tonga intend to bring the issuance of import licenses into
conformity with the national treatment provisions of GATT Article III as well as Article XI?
For each of the past three years, please pr ovide the number of import licence applications
received from non-Tongans and the number of appl ications that were approved.  What were the
reasons given for the denial of the import licence applications?
Answer:
The import licensing system has been reviewed since the Memorandum was distributed. The
Trading Licence Screening Committee has been abolished and licenses are now granted to Tongans
and non-Tongans alike. There is therefore now no discrimination between non-Tongans and Tongans
regarding the issuance of import licence.
Question 71.  
In this section, Tonga states, "There are no strict procedures regarding applications for import
licenses.  However, applications must already be in possession of a licence under the Licenses
Act". In the second sentence, is "applicant" the correct word instead of "applications"?
(a) If applicants is the correct word, howev er, the two sentences seem to imply that an
applicant has to have a licence under the Licenses Act in order to apply for an import
licence. This also seems not correct.  Could Tonga clarify this statement.WT/ACC/TON/4
Page 32
Answer:
Yes, 'applicant' is the correct word, not 'applications'. However, all businesses do require a
licence to engage in business activities (please see answer to Question 38 above) before they can
apply for an import  licence.
(b) Please provide a copy of the importer licence application. (note:  It is not in Annex II.
end note)
Answer:
This has been provided to the WTO Secretariat (WT/ACC/TON/4/Add.1 refers).
Question 72.  
Please state the contribution to Government reve nue that is provided by import licensing fees?
Answer:
Over T$ 200,000 Tongan Pa'anga in 1999 (about US$ 140,000).
Question 73.  
According to Annex III of the Memorandum, import licenses for non-Tongans are not
automatically issued.  Are import licenses for Tongans issued automatically?  How does Tonga
ensure a national treatment fo r issuing import licensing.
Answer:
See answer to Question 70 above.
Question 74.  
Can Tonga explain why non-Tongans applications for import licensing are subject to
consideration by Tonga Trading Licence Screening Committee?
Answer:
See answer to Question 70 above.
Question 75.  
Why does the Ministry of Finance require import licenses on eggs?  How does Tonga intend to
revise the import licensing system as indicated in page 18?
Answer:
The Ministry of Finance requires an import licence on eggs to closely monitor and control
imports for the sake of the local Poultry farms. Tonga is prepared to review this measure taking into
account the views of WTO Members.
Question 76.  
We note that the private sector has expressed dissatisfaction with the system of import (and
export) licensing.  We support measures to reduce practical hindrances to trade as far asWT/ACC/TON/4
Page 33
possible. The WTO Agreement on Import Licensing Procedures requires that licensing systems
be operated in a transparent, predictable, fair and equitable manner that does not impede
trade:
(a) Are there plans for a review of  the operation of the system?
Answer:
See answer to Questions 69 and 70 above.
(b) What is the reason for discriminating between Tongans and non-Tongans in the way in
which licence applications are considered?
Answer:
The procedure has been reviewed and currentl y licenses are automatically issued to any
person.
(c) What criteria does the Trading Licenses Steering Committee use to assess applications?
Answer:
This Committee had been dissolved.
(d) The memorandum states (page 39) that there are no strict procedures regarding the
application for import licenses.   However, applicants must already be in possession of a
licence under the Licenses Act.  Can Tonga please explain this further?
Answer:
Please see answer to question 71 above.
(e) What licence is this referring to, how is it obtained, and is it available to Tongans and
non-Tongans equally?
Answer:
As mentioned earlier, this is the Importing Licence and can be obtained from the Licensing
Unit, Ministry of Labour, Commerce & Industries. It is available to Tongans and Non-Tongans alike.
(f) It is noted that Tonga has "no strict procedures regarding applications for import
licenses" and "no strict rules as to the documentation which has to be submitted".  Can
Tonga clarify these statements?  In particular will Tonga be reviewing thesearrangements to ensure that they accord with the WTO Import Licensing Agreement,
which for example requires publication of all procedures?
Answer:
Please see answer to Questions 69 and 70 above.
Question 77.  
We note from Annex III that the principal purpose of import licensing is to raise revenue by
taxing imports.  The fees charged appear to be of the type covered by Article VIII of GATT1994, which requires that licensing and other simila r fees and charges must be limited to theWT/ACC/TON/4
Page 34
cost of the service that is provided.  Given the stated aim of import licensing applied by Tonga,
there does not seem to be any service provided and the fees appear to be excessive:
- can Tonga advise whether it considers the licensing system and its associated fees to be
consistent with Article VIII of GATT 1994?
- what plans does Tonga have to bring its licensing arrangements into conformity with the
WTO?
Answer:
As per Question 69.
(h) Customs valuation procedures
Question 78.  
According to the information provided in th e Memorandum on Foreign Trade Regime, Tonga
does not appear to be using transaction value for the purposes of customs valuation.  Tonga willneed to implement fully the WTO Agreement on Cu stoms Valuation, as of the date of accession.
(a) Will the Government of Tonga commit to implement fully the WTO Agreement on
Customs Valuation, as of the date of accession?
Answer:
Tongan customs valuation procedures date from well before the WTO Agreement on customs
valuation and have not been amended since the negotiation of this Agreement. They are not, therefore,
based on transaction value. Tonga recognises that, as a WTO Member, it will have to bring its
procedures into conformity with the WTO Agreement a nd is ready to do so. It is also ready to discuss
in the Working Party the legislative and other steps that need to be taken to achieve these objectives.
Tonga will need technical assistance in this area and the availability of such assistance will largelydetermine the timetable for its implementation of the Agreement.
(b) Could Tonga please complete the questio nnaire on customs valuation contained in
Annex IV of WT/ACC/1, so that the Working Party can begin the process of
ascertaining what changes Tonga will need to make to its laws to conform with the WTO
Agreement on Customs Valuation?
Answer:
The questions in the Questionnaire all relate to  the implementation of the different provisions
of the WTO agreement on customs Valuation. Tonga can only reply to these by stating that it does not
apply these provisions at the present time. It has al ready stated in answer to the previous question that
it will have to make radical changes in its custom s valuation procedures in order to bring them into
line with the Agreement.
(c) Could Tonga please provide a copy of th e Customs and Excise Act, referred to in
WT/ACC/TON/3, section IV(h)?
Answer:
This has been supplied to the WTO Secretariat (WT/ACC/TON/4/Add.1 refers).WT/ACC/TON/4
Page 35
Question 79.  
Does the Tongan Government plan to appl y the WTO Agreement on customs valuation?
Answer:
Yes - see answers to the previous questions.
Question 80.  
To allow a useful examination of Tonga's custom s valuation regime, Tonga will need to provide
the Working Party with the questionnaire on cust oms valuation at the earliest opportunity (as
detailed in WT/ACC/1): in addition to the questionnaire, can Tonga clarify what is meant  by
the statement "the price which in the opinion of the Controller ..."?  This would appear to allow
the Controller an arbitrary judgement of the val ue of a good and therefore be inconsistent with
Article VII of GATT 1994 and the WTO Customs Valuation Agreement.
(a) Can Tonga advise what steps are in train to bring its customs valuation legislation and
practices into conformity with the WTO Customs Valuation Agreement?
Answer:
Tonga recognises that its present customs valuation system gives discretion to the Controller. Please
see answers to the previous questions.
(b) Does Tonga envisage any difficulties in achieving WTO conformity?
Answer:
Tonga does not foresee any difficulties of principle but lack of resources does create practical
difficulties. Its need for technical assistance in this regard is referred to in the answer to Question 78.
(k) Internal taxes on imports
Question 81.  
The memorandum mentions Tonga's policy on national treatment on internal taxation but not
on regulatory aspects of sale, offering for sale, purchase, transportation and distribution. Please
explain how the policy in this area complies with Art. III.4 of GATT 1994?
Answer:
In general, Tonga applies its laws and regulations affecting the sale, offering for sale,
purchase, transportation and distribution of imported goods on a national treatment basis. These laws
and regulations relate to a number of different WTO Agreements, which are dealt with in the relevant
sections of this document.
Question 82.  
Tonga charges an excise duty of 50 per cent or T$ 0.75 seniti per litre on beer produced in
Tonga.  Does Tonga charge an excise duty on im ported beer? If yes, what excise duty rate is
applied to imported beer?WT/ACC/TON/4
Page 36
Answer:
Please see the answer to Question 46 above.
Question 83.  
Tonga has a sales tax exemption for sales of loca l agriculture, livestock and fisheries products in
government markets by individual sellers around the markets or at farm gates throughout theKingdom.  Are sales of imported agriculture, liv estock and fisheries products also entitled to
this sales tax exemption?
Answer:
Difficulties of tax collection have made it necessary to exempt these very small producers
from sales tax. The distinction made is between these very small producers and sellers  and larger
businesses, rather than between imported and locally produced goods.
(l) Rules of origin
Question 84.  
Is the Tonga's government ready to implement the WTO agreement on rules of origin?
Answer:
Yes.
Question 85.  
When Tonga accedes to the WTO, under the Agreem ent on Rules of Origin it will have certain
obligations including in regard to the transparency of laws, regulations and practices regarding
rules of origin.  Tonga should implement the Agreement on Rules of Origin from the date of
accession, however, until the international work  program for the Harmonisation of rules of
origin is complete, Tonga should  abide by the transitional disciplines of Article 2 of the
Agreement from the date of accession.  When  the Harmonisation work program is complete,
Article 3 will apply - does Tonga anticipate any difficulties with this?
Answer:
No.
Question 86.  
(a) According to the Foreign Trade Memorandum, Tonga applies rules of origin only in the
context of preferential trade.  However, according to paragraph IV.1.(b) (Customs
tariff), Tonga applies a single set of tariff rates on all imports, regardless of their
country of origin, and does not apply tariff preferences.  Please confirm that Tonga does
not apply tariff preferences to any imports.
Answer:
Tonga does not grant tariff preferences.
(b) Please explain the circumstances in whic h Tonga applies non-preferential rules of
origin.WT/ACC/TON/4
Page 37
Answer:
Tonga does not apply non-preferential rules of origin.
(m)(n)(o)  Anti-dumping, Countervailing Duties and Safeguard Regime
Question 87.  
Tonga does not have policies nor legislation for anti-dumping and countervailing duties and for
safeguard measures.  Will the Government of Tonga commit to the non-application of anti-
dumping duties, countervailing duties, and safeguard measures, until WTO-compatible
legislation is enacted and notified to the appropriate WTO bodies?
Answer:
Yes.
Question 88.  
Does Tonga intend to adopt specific legislation regarding anti-dumping, countervailing duties
and safeguard regime?
Answer:
Tonga has no plans to introduce legislation on anti-dumping, countervailing duties or
safeguards.
Question 89.  
We note that Tonga does not have any policies  or legislation in the areas of antidumping,
countervailing duties or safeguards.  There is no WTO requirement to introduce such
legislation if Tonga has no plans to implement such measures to deal with imports that are
causing injury to domestic industry:
Can Tonga provide a commitment that it will not implement such measures in practice until
appropriate legislation is in place, and that any such legislation that might be introduced in the
future will be consistent with WTO requirements?
Answer:
Yes.
2. Export Regulation
(a) Registration
Question 90.  
(a) Please identify the business activities that require a licence to export goods (if different
from import goods), pursuant to the Licenses Act, Cap.47.
Answer:
All businesses require a business licence to operate. Please see answer to Questions 36 to 38
above.WT/ACC/TON/4
Page 38
(b) Is the decision to issue the licence discreti onary?  Please describe the criteria that are
considered in the determination of whether or  not to grant a licence to export goods.
Answer:
The only requirement is the payment of the relevant fee. The schedule of fees is to be found in
Annex II of the Memorandum.
(c) Quantitative export restrictions
Question 91.  
(a) The Director of Agriculture must give authority for the export of veterinary biological
and organic products; animals, birds, fish and reptiles, Insects and gastropods; plants
and fungi; seeds; and trees and lumber. What is the GATT rationale for quantitative
restrictions for each of these products?
Answer:
Protection of rare and indigenous protected species (plants and animals). Environmental
protection.
(b) What criteria are considered by the Director  of Agriculture in making his determination
whether or not to allow the exportation of the agricultural products?
Answer:
Maturity and exportable size of agricultural products exported.  Requirements from the
country of importation.
(c) Is the export authorization granted to foreign applicants pursuant to the same terms
and conditions as for Tongans?  Are the ap plication and approval procedures the same
for Tongan and foreign applications?
Answer:
Yes, procedures in standard to all.
Question 92.  
(a) Certain exports are restricted and need special authority given by the Director of
Health.  What is the GATT rationale for restr icting the export of medical biological and
organic products, chemicals, drugs and secondhand clothing?   What criteria are
considered by the Director of Health in maki ng a determination whether or not to allow
exportation of these products?
Answer:
Medical, biological and organic products: quarantine measures to prevent the introduction of
new diseases to foreign destinations.  Chemicals, drugs: control of narcotics. Secondhand clothing:
health.
(b) Are the application and approval pro cedures the same for Tongan and foreign
applications?WT/ACC/TON/4
Page 39
Answer:
Standard procedures for all.
(d) Export licensing
Question 93.  
The background behind Tonga requiring export licensing on the agricultural products listed on
page 21 of the Memorandum should be explained.  The export licensing procedure should be
clearly explained.
Answer:
This licensing requirement provides revenue. Licenses are freely available on payment of the
corresponding fee. Fees are sometimes raised in order to protect the environment or regulate exports
when the product concerned is in short supply on the local market. The schedule of fees is to be found
on page 21 of the Memorandum.
Question 94.  
GATT Article VIII provides that all export fees  and charges shall limited in amount to the
approximate cost of the services rendered and sha ll not be a taxation of imports or exports for
fiscal purposes.
(a) How does the Government of Tonga intend to bring its export licensing fee structure
into conformity with the requirements of GATT Article VIII?
Answer:
Please see answer to Question 69, which also applies to the export side.
(b) What is the rationale for requiring export licenses for the fish and agricultural products
listed on page 21 of the English-language version of the Memorandum on ForeignTrade?
Is the granting of export licenses automatic?  If not, how does the Government of Tonga
intend to bring the issuance of export li censes into conformity with the national
treatment provisions of GATT Article XI?
Answer:
See answers to Question 91.
(c) Do different procedures apply to export licence applications from Tongans and non-
Tongans?   If yes, please describe the differences in the procedures.
Answer:
No, standard procedure is rendered for all.WT/ACC/TON/4
Page 40
(f) Export financing
Question 95.  
We understand that Tonga's main export commodity is squash pumpkin, and that growers of
this product are guaranteed against losses arising from climatic conditions. Could Tonga
explain in more details how this support system works?
Answer:
Tonga does not have any system guaranteeing growers of squash pumpkin against losses
arising from climatic conditions. However, the Government has provided assistance on an ad hoc
basis to alleviate damage caused by drought and other natural disasters.
Question 96.  
Can Tonga please provide more information on the facilities provided to exporters by the Tonga
Development Bank?
Answer:
The Tonga Development Bank (TDB) provides facilities, such as term loans, for:
1. The production of commodities like squash, vanilla and root crops.
2. Loans to companies to assist in covering the cost of freight, inputs (like fertilizers and
chemicals) and marketing of export products (like purchase of squash bins).
3. Companies purchasing  export commodities e.g. vanilla.
These loans are granted on purely commercial terms and are not subsidized by the
Government.
Question 97.  
Does Tonga provide any export subsidies on agricultural products of the kind covered by
Article 9 of the WTO Agriculture Agreement, and if so can Tonga provide details?
Answer:
Tonga will supply information on domestic support and export subsidies in Agriculture in the
WT/ACC/4 format as soon as possible.
Question 98.  
The operations of the Venture Capital Fund to provide equity capital support for the
development of private sector projects which promote exports or import substitution may be
incompatible with th e requirements of the WTO Agreement on Subsidies and Countervailing
Duties.
(a) Please provide more detailed information on the operations of the Venture Capital Fund
and describe the benefits it provides to qualifying projects.WT/ACC/TON/4
Page 41
Answer:
The Venture Capital Fund provides capital for the development of viable private sector
projects. This capital is only provided as a commercial venture to successful companies wishing to
expand  their activities. Priority is given to projects which promote exports or import substitution,
foreign exchange earnings, the creation of employment, training opportunities and the introduction ofnew skills but the facility is available to all businesses and is not calculated in relation to exports. The
maximum that can be invested for a single project is T$50,000 (about US$ 35,000). Only three
projects have been financed in the last three years.
(b) Please provide additional information about the Export Guarantee Scheme and the
Export Diversification Fund.  What are the qualification requirements and what
benefits are available for exporters?
Answer:
The Export Guarantee Scheme was established by the Tonga Reserve Bank to guarantee loans
from overseas sources. However, this scheme has not been utilized, and to date no such loans have
been guaranteed.
The Export Diversification Fund totalling T$1.05 million was provided by the Tonga
Government in 1991 to promote exports. In the early stages of the development of squash exports, thisFund was used to assist some companies in  their marketing of the squash. The Fund was fully utilised
and the money repaid to the Government.
(c) For each of the past three years, please  provide the amounts paid pursuant to pumpkin
growers pursuant to the Loss Guarantee Program.
Answer:
Please see reply to Question 95.
(g) Export performance requirements
Question 99.  
Does Tonga consider that the arrangements described on page 23 of the Memorandum
constitute export performance requirements of the kind covered by the WTO Agreement onTrade-related Investment Measures?
Answer:
It is our understanding that the TRIMs Agreement prohibits trade balancing requirements that
restrict exports and not the arrangements described on page 23.
Question 100.  
Could Tonga provide more information on the export requirements and sanctions that may be
imposed for non-performance?WT/ACC/TON/4
Page 42
Answer:
It is expected that 90% of production of such manufacturing industries is expected to be
exported overseas and 10% is allowed to be sold locally. If these exports are not made, duty is
payable. Duty drawback is applied on a most-favoured nation basis .
Question 101.  
Please explain how the Government of Tonga intends to eliminate the export performance
requirements in the Development Licence program, under the Industrial Incentive Act, 1978.
Answer:
The Government is reviewing the Industrial Development Incentive Act.
(h) Import duty drawback requirements
Question 102.  
According to the Foreign Trade Memorandum, holders of a Development Licence are not
subject to customs duty on the import products or materials used in the processing,
manufacturing or assembly of products determined to be primarily for export.
(a) How does the Government of Tonga ensure that there is no import duty drawback for
finished products sold on the domestic market?
Answer:
Customs duty is not paid on the products or materials if a determination has been made that
the finished goods are primarily for export.
(b) Please describe in detail the procedures to obtain a Development Licence.  Are the
procedures the same for Tongan and for foreig n enterprises?  What criteria are applied
in determining whether an applicant qualifies for a Development Licence?
Answer:
Please see section on Foreign and Domestic Investment Policies, Questions 15 to 24.
3. Internal Policies Affecting Foreign Trade in Goods
(a) Industrial policy
Question 103.  
According to WT/ACC/TON/3/Add.1, the Government  of Tonga provided the Secretariat with a
copy of Act No. 11 of 4 October 1982, To Amend the Industrial Development Incentives Act
1978.  However, the Industrial Development Incentives Act, 1978, itself appears to have not
been submitted. If you have not already done so, please provide a copy of the Industrial
Development Incentives Act 1978 to the Secretariat for review by the Working Party.
Answer:
This has been supplied to the WTO Secretariat (WT/ACC/TON/4/Add.1 refers).WT/ACC/TON/4
Page 43
(b) Technical regulations and standards
Question 104.  
Please complete the questionnaire on Technical Barriers to Trade.
Answer:
Tonga's only standards legislation is the Public Health Act 1992, under which the Minister for
Health is empowered to make regulations in relati on with food standards. A copy of this Act has been
supplied to the WTO Secretariat (WT/ACC/TON/4/Add.1 refers). However, as of today, the Minister
for Health has not make any food standard regulation. Tonga therefore has not adopted any technical
regulations, standards or conformity assessment procedures and is not currently planning to do so.
The only other question in the Questionnaire not covered by this response appears to us to relate to the
Enquiry Point which, in the case of Tonga, will be the WTO Desk in the Ministry of Labour,
Commerce and Industries. It is our understanding that this reply constitutes our answer to the TBTQuestionnaire.
Question 105.  
Please provide a response to the Questi onnaire on Technical Barriers to Trade.
Answer:
As per Question 104.
Question 106.  
Tonga will need to implement fully the WTO Agreement on the Technical Barriers, as of the
date of WTO accession.  Will the Government of Tonga commit to implement fully the WTO
Agreement on Technical Barriers to Trade as of the date of accession?
Answer:
Yes. Tonga will also be prepared to undertake that any TBT measures which it introduces in
the future will be consistent with the TBT Agreement.
Question 107.  
Does Tonga's standards and inspection regime conform fully with the requirements of the WTO
TBT Agreement?  Please describe in detail any aspects of Tonga's standards and inspection
regime that are currently deficient and the steps Tonga will take to remedy the deficiency prior
to WTO accession.
Answer:
Tonga will establish an enquiry point. Tonga's TBT regime fully conforms with the
requirements of the TBT Agreement. See answer to Question 104.
Question 108.  
Please describe in detail the process used by the Minister of Health in establishing standards.WT/ACC/TON/4
Page 44
Answer:
While the Minister for Health is empowered by the Public Health Act 1992 to make
regulations in relation with food standards, he has not made any such regulation. There has been no
need for detailed regulations setting out the process to be used for establishing standards. Please also
see the answer to Question 106.
Question 109.  
What references does Tonga make to internat ional standards in its standards legislation?
Answer:
See answer to Question 104.
Question 110.  
Does Tonga participate in any internationa l standards organizations, such as Codex
Alimentarius or the Organization of International Epizootics?  How does Tonga incorporateinternational standards into its standards regime?
Answer:
See answer to Question 104.
Question 111.  
Tonga will have to accede to the TBT agreement  from the first day of accession to the WTO.
What practical steps is Tonga planning to ta ke to prepare for the accession to the TBT
agreement.
Answer:
Tonga will conform to the TBT Agreement from the date of its accession. Please see answer
to Question 104.
Question 112.  
There is nothing in the WTO TBT Agreement that requires Tonga to implement standards
where currently none exist.  However, Tonga will  need to provide a commitment that all future
standards and conformity assessment systems that it introduces will be consistent with WTO
requirements:  can Tonga provide such a commitment?
Answer:
Yes.
Question 113.  
Does Tonga intend to adopt a specific legisl ation on standards and certification related to
imports of non-food products? How is the current situation?
Answer:
As per Question 104.WT/ACC/TON/4
Page 45
Question 114.  
Could Tonga please provide a copy of the Public Health Act 1992 to the Secretariat for review
by the Working Party?
Answer:
A copy has been supplied to the WTO Secretariat (WT/ACC/TON/4/Add.1 refers).
Question 115.  
Tonga will need to provide the Working Party with more information on the operation of the
Public Health Act as it relates to standards:
(a) Can Tonga provide information in the format detailed in the questionnaire on TBT in
Annex 5 of WTO document WT/ACC/1?
Answer:
As per Question 104.
(b) To what extent do Tonga's standards align with international standards (for example
those developed by the Codex Alimentarius Commission)?
Answer:
Tonga does not have any standards - see answer to Question 104.
Question 116.  
Please indicate the number of cases, in the past  three years, in which the Government of Tonga
has denied or significantly delayed entry of foreign goods on the ground that the goods did not
satisfy regulations on standards, measurement or quality, or were not correctly documented
under such regulations.  Please provide a genera l description of the most significant problems
that foreign goods have encountered in satisfying standards requirements.
Answer:
Tongan government has not significantly delayed entry of foreign goods on the grounds that
they did not satisfy regulations on standards as no standards exist.
(c) Sanitary and Phytosanitary measures
Question 117.  
Does Tonga follow the procedures laid down in the SPS agreement? If not, does Tonga
anticipate any difficulties in applying the SPS agreement in full on accession?
Answer:
Tongan procedures largely follow those of Australia and New Zealand and the procedures
laid down in the SPS Agreement. See the answer to Question 121 below.WT/ACC/TON/4
Page 46
Question 118.  
We note that Tonga's Quarantine Act allows for quarantine restrictions to be applied.  The
Working Party will want to examine Tonga's sanitary and phytosanitary measures in fuller
detail, including prohibitions or other restr ictions such as certification requirements:
(a) Can Tonga provide a copy of the Quarantine Act, the associated import regulations, and
the code of conduct?
Answer:
A copy of the Plant Quarantine Act (Cap 127) 1988 together with the Amendments to that
Act and its associated Regulations 1995 and Fee Regulations 1997 has been supplied to the WTO
Secretariat. In addition, a copy of the Animal Diseases Act (Cap 146) 1978 and the Public Health Act
1992 and the Amendments to that Act have also been supplied (WT/ACC/TON/4/Add.1 refers).
(b) To what extent do Tonga's standards a lign with relevant international standards?
Answer:
Plant:  Plant Quarantine Act and Amendments align with international organisations'
standards such as those of the FAO (Food Agricu lture Organisation) and IPPC (International Plant
Protection Convention) both of which Tonga is a member. Under IPPC, a regional organisation
namely the PPPO (Pacific Plant Protection Organisation) actively operates to set standards that fitPacific requirements. Such standards are submitted to the member countries (Forum Island Countries
including New Zealand and Australia) for funding and implementation. In addition, the PPPO reviews
and drafts any standards regulation of any member to align with the international requirements of the
IPPC. The PPPO meets every 3 years. Tonga is in the executive committee representing the
Polynesian Island Countries.
Animal: Tonga a member of FAO and OIE (Inter national Office for Animal Diseases). Tonga
uses their standards as a basis for its own.
(c) Does Tonga envisage any difficulties in complying with the requirements of the WTO
Agreement on SPS Measures?
Answer:
No.
Question 119.  
If you have not already done so, please provide a copy of the laws and regulations relating to
Sanitary and Phytosanitary Standards to the Secretariat for review by the Working Party.
Answer:
Please see answer to Question 118.
Question 120.  
Please identify, including HS numbers, all products subject to Sanitary and Phytosanitary
restrictions and requirements, including quarantine.WT/ACC/TON/4
Page 47
Answer:
Lists of prohibited products are contained in the second schedule of the Regulations under the
Plant Quarantine Act and in the Animal Diseases Act. These are reproduced below.
98
SECOND SCHEDULE
(Regulation 31)
Importation of plants and plant materials of the following species is prohibited as stated.
Plant
Name Plants or plant material prohibited
Banana, Abaca, other Musaceae Heliconiaceae Plants, corns and cut flowers
All Beans of the species Phaseolus All except seed
Cassava (Manihol esculenta Grantz) All except tissue cultures
Citrus All except fruit and seeds. Fruit from
Areas where citrus canker (Xanthomonas
Campestris p.v. citri, (Hasee) Dye)
Occurs.  All of Murraya spp.
All palms including coconut All except seednuts and pollen from
Areas approved by the Minister
Cacao and host plants of Cacao swollen shoot All except seed from Asia Pacific Region
Coffe (Coffea spp.) All propagating material except seed
Maize (Zea mays L) All except seed
Peanut (Arachis hypogaea L) All except seed
Potato (Solanum tuberosum L) All except tubers, true seed and tissue culturesSorghum All except seed
(Sorghum spp)
Rubber (Hevea spp) All
Taro and edible aroids (Alocasia spp, All except propagating material, seed and
Colocasia spp, Xanthosoma spp nd tissue cultures
Cyrtosperma spp)
Tomato All except fruit and seed(Lycopersicon esculenum Miller)
Orchidaceae All except tissue cultures and seedlings in
Sterile flasks.
Animal
Prohibition on importation or 7.  (1)  No person shall import or introduce into
or liberation of certain animals the Kingdom without prior approval of His
Majesty’s Cabinet any animal or carcass of
the species listed belowlisted below:-
(a) any snake of any species whatever;(b) any venomous reptile, or any living stage of
any venomous amphibian, venomous fish or
venomous invertebrate;
(c) any monkey of any species;
(d) any member of the squirrel species;4(e) any red fox or silver fox;
(f) any musquash (or muskrat);
(g) any hamster;WT/ACC/TON/4
Page 48
(h) any mongoose;
(i) any coypu (or nutria);
(j) any mink;
(k) any rabbit;
(l) any hare;(m) any deer
(n) any opossum;
(o) any other animal that is likely to become a 
nuisance or to cause injury or damage.
(2) No person shall without prior approval of
Cabinet import or introduce into the Kingdom the
egg, semen or carcass of any animal specified insubsection (1) of this section.
Question 121.  
Please submit a response to the Questionnaire on Sanitary and Phytosanitary Measures.
Answer:
Tonga's SPS legislation is not recent but its detailed procedures relating to both animals and
plants are modern and are revised frequently as necessary. A large amount of assistance has also been
received from both Australia and New Zealand to establish facilities, e.g. quarantine treatment
facilities, to develop standards and to implement standards, e.g. setting procedures to be followed and
training officials.
The following notes relate to the points on pages 2 and 3 of WT/ACC/8.
1. Standstill. It is Tonga's intention that new standards, animal health regulations and food safety
regulations will conform to the SPS Agreement.
2. Contact Point. At the present time, enquiries relating to animal health may be addressed to Dr.
Siosifa Fifita, Head of Livestoc k Division, Ministry of Agriculture and Forestry and to plant
health to Mr. Sione Foliaki, Head, Quarantine and Quality Management Division, Ministry ofAgriculture and Forestry.
3. Transparency. (a) Not applicable. (b), (c), (d). There are no such provisions at present.
4. Necessity. Importation is only prohibited when necessary to protect human, animal or plant
life and health.
5. Regulations based on science. No reference is made to this principle in the relevant laws but
regulations are, in fact based on scientific evidence.
6. Harmonisation. Tonga bases its SPS measures to the extent possible on international
standards. It is a member of OIE, IPPC and Codex and also receives help from regional
organisations in keeping its SPS measures up to date, in particular the Secretariat of the
Pacific Plant Protection Organisation and, on the animal side, the Secretariat of the Pacific
Community.
7. Equivalence. Tonga recognizes different measures that achieve the same level of protection.
In this respect, its regulations are based on those of Australia and New Zealand.
8. Risk assessment. Tonga has the capability of doing its own risk assessments.WT/ACC/TON/4
Page 49
9. Regional conditions. Tonga's measures take regional conditions into account. Reference has
already been made to its membership of PPPC and the Pacific Community.
10. Non-discrimination. Tonga's measures  do not arbitrarily discriminate.
11. Tonga has no measures which establish tolerances for the use of additives or contaminants.
Question 122.  
Please provide specific details on the sanitary  and Phytosanitary requirements for all categories
of imported animal and plant products.  Also please provide a list of quarantine pests.
Answer:
For specific details on SPS requirements for animals and plants, please refer to Annex 5, via
Regulations.
Tonga has submitted it's list to the GPPIS list. Please refer to the web site : FAO/IPPC for the
complete listing.
(d) Trade-related investment measures
Question 123.  
Does Tonga intend to notify any measures under the TRIMs agreement?
Answer:
No.
Question 124.  
Please list all existing measures and affected products that are inconsistent with the WTO
Agreement on Trade-Related Investment Measures. Will Tonga eliminate all TRIMs-
inconsistent measures prior to WTO accession?
Answer:
Tonga has no inconsistent restrictions on TRIMs.
(e) Privatisation
Question 125.  
Please complete the state-trading questionnaire.
Answer:
Tonga has no state trading enterprises. It is our understanding that this answer constitutes our
reply to the Questionnaire on State Trading.
Question 126.  
Could you provide details of the privatisation plan?WT/ACC/TON/4
Page 50
Answer:
As of 30 June 1998, the Government shareholding s in other organisations were as follows:
Organisation% of Ownership by
GovernmentShares
(1998/99)Value per
ShareFace Value
(Tongan
Pa’anga T$)
1. Air Pacific Limited No longer got equity 70,400.00 F$ 1.00 62,174.33
2. Pacific Forum Line
Limited5 % 1,271,956.00 W$ 1.00 775,583.00
3. Shipping Corporation 60 % 6,000.00 T$ 1.00 6,000.00
4. Bank of Tonga 40 % 120,000.00 T$ 10.00 1,200,000.00
5. Tonga Development
Bank100 % 943,929.00 T$ 10.00 9,439,290.00
6. International Finance
CorporationCannot be determined.
Got % as no authorized
capital amount given19.00 US$ 100.00 26,355.89
7. Royal Tongan Airlines 99 % 6,916,466.00 T$ 1.00 6,916,466.00
8. Sea Star Fishing Co.
Ltd.63 % 30,000.00 T$50.00 1,500,000.00
9. Leiola Duty Free 60 % 600,000.00 T$ 1.00 600,000.00
10. Export Produce
Treatment Services
Ltd.20 % 40,000.00 T$ 1.00 40,000.00
11. FRISCO 99 % 99.00 T$ 1.00 99.00
12. Home Gas 99 % 99.00 T$ 1.00 99.00
13. International Dateline
Hotel99 % 5,999,999.00 T$ 1.00 5,999,999.00
14. Primary Produce
Ltd.99 %99 % 99.00 T$ 1.00 99.00
15. Royal Beer 42 % 250.00 T$ 1.00 250.00
16. Tonga Investment
Limited50 % 100.00 T$ 1.00 100.00
17. Tonga National
Shipping Line90 % 90.00 T$ 1.00 90.00
18. Tonga Timber Limited 99 % 1,619,999.00 T$ 1.00 1,619,999.00
Total 28,186,604.22
Source : Ministry of Finance, 2000.
The Government of Tonga has established a Cabinet sub-committee which will set the plan,
timing and other tasks associated with the restruct uring of Government commercial activities. It has
also through the Ministry of Finance established a Government Investment Unit (GIU) to develop and
design programs and timetable for corporatisation and privatisation  of government investments.
These programs are closely linked to the progress of the private sector, their needs and the constraints
that they face. The Government's reform policies take into consideration suggestions made by the
private sector.
Assistance has been sought from the Asian Development Bank (ADB) for the designing of
policies on public sector reform and the development of policies that accelerate economic growth
leading to a more job opportunities (creation of employment).
The following action has been taken since June 1998:
- The Telecommunication Industry was privatised in July 2000.WT/ACC/TON/4
Page 51
- The Government Store has ceased operation, except disposal of goods on hand still in
the processing stage.
- Privatisation of the Port Authority in 1998/1999.
The following alterations should be made to the figures for Government shareholdings given
in the table on page 25 of our Foreign Trade Regime Memorandum. The Government stake in the lastthree entities has been significantly reduced.
Enterprise Activity Government Stake (%)
Tonga Development Bank Development Bank 99
Royal Beer Co. Ltd Brewery 40
International Dateline Hotel Hotel 60
Sea Star Fishing Co. Ltd Commercial Fishing 70
The Machinery Pool under the Ministry of Agriculture and Forestry is due for privatisation in
the year 2001.
Because the Government of Tonga needs to gradually release and privatise the government
owned businesses, it is believed that a period of 5 to 10 years is needed for this gradual progress totake place.
Question 127.  
Are there any restrictions to foreign participation in the privatisation program (e.g. specific
sectors excluded, ceiling level of participation)? If so, do these restrictions also apply to potential
domestic investment?
Answer:
No.
Question 128.  
We hope that Tonga's policy of increased pri vate sector participation in the economy will be
reflected in progress toward privatising some of  the larger public enterprises.  We would also
hope that this process will allow full access for the private sector through open tendering
processes: Is Tonga able to provide details of privatisation plans which may be in place?
Answer:
As per Question 126.
Question 129.  
The Government Suppliers Department appears to have a special privilege on sales to the
Government net of customs duty and Port and Services Tax.  Please describe fully theoperations of the Government Suppliers Department in the form of a response to the
Questionnaire on State Trading Enterprises.
(a) What is the status of the privatization of the Government Supplies Department?WT/ACC/TON/4
Page 52
Answer:
The Government Supplies Department operation in terms of purchasing of goods for resale
has been terminated on 30 June 1999. The stocks are being sold out. There was no private interest to
buy out the store as a going concern.
(b) Please describe the activities of the Tonga Investment Ltd, a holding company.
Answer:
Tonga Investment Ltd. is a Hardware Store for c onstruction materials. It provides a variety of
stocks from timbers to roofing materials to bathroom materials, etc.
(c) Are there private sector competitors on-isl and for Leiola Duty Free Shops - Tonga Ltd,
Sea Star Fishing Co, Ltd and Tonga Timber Ltd?
Answer:
Yes, they do have private sector competitors.
- Leiola Duty Free Shops (Tonga) Ltd.: Vete Br ewery, Morris Hedstrom Co. Ltd., E.M. Jones
Co. Ltd, Kinikinilau Shopping Centre Co. Ltd.
- Sea Star Fishing Co. Ltd.: 'Alatini Fisherie s Co. Ltd., Maritime Fishing Co. Ltd., Friendly
Island Fishing Co. Ltd, sea Eagle Fishing Co. Ltd.
- Tonga Timber Ltd.: Morris Hedstrom Co. Ltd., Pa cific Timber Co. Ltd, Lionvest Co. Ltd.,etc.
Question 130.  
The Government of Tonga has a stake in 26 enterp rises. Out of the ten Companies listed in the
first table, only two have a government stake of less than 42 per cent.  In the remaining eight
companies the government stake is more than 97.8 per cent.  The Memorandum notes that it is
the policy of the Government to encourage incre ased private sector participation in economic
activity, and to rationalize or privatize many of the activities its controls.
(a) How does the Government of Tonga plan to proceed with plans to privatize these
enterprises and how long is it expected to take?
Answer:
Please see answer to Question 126.
(b) There are only 14 of the 26 enterprises and ut ilities listed.  Please list the remaining 12
companies along with their activity and government stake.
Answer:
As per Question 126.
(l) Government procurement practices
Question 131.  
Does Tonga intend to join the Government Procurement Agreement? If not, why?WT/ACC/TON/4
Page 53
Answer:
The Government Procurement Agreement is a plurilateral agreement in which only a
relatively small number of WTO Members participate. It was not drawn up with the situation of very
small developing countries, such as Tonga, in mind.  On the one hand, given the high level of the
thresholds which it contains, Tonga does not have the capacity to bid for or obtain contracts coveredby the Agreement. On the other, it is probable that, for the same reason, few if any Tongan
government contracts would be covered by the Agreement. Large contracts in the context of economic
aid programs from, e.g. the Asian Development Bank, are already covered by the procurement rules
of the organisations concerned.
Question 132.  
Please provide a breakdown of the public procur ement market both by contracting entity and
product type?
Answer:
The statistics requested are not collected.
Question 133.  
Answer:
We seek Tonga's accession to the Government Procurement Agreement, and requests a
commitment to initiate negotiations for accession with the submission of a schedule of
commitments to the Government Procuremen t Agreement Committee within three months
after accession.  Is Tonga willing to do this?
Answer:
Please see answer to Question 131.
Question 134.  
Please describe the specific procurement procedures that apply to the purchase of goods and
services from outside Tonga, i.e., by the government appointed agents in Australia and New
Zealand.
Answer:
The procurement of supplies is one by open competition, through public tender in which all
local and overseas suppliers are invited. When reaching the closing date of Tender, all quotes are
evaluated and the order or contract is awarded to the bidder with the best prices. If the winner is
outside Tonga then the order is prepared in a specific form known as 'Overseas Requisition'. This
order form then has to be endorsed by Treasury and approved by the Prime Minister before it is sent
to the Government Agent in the country concerned. The Overseas Agents then places the order with
the supplier, arranges transportation, verifies specification expedites etc. until the good have arrivedsafely into the Government Store. The overseas Agent also pays the supplier and bills the Government
of Tonga for their spending plus commission. The Treasury Tonga pays the Agents and debits the
amount to the Government.WT/ACC/TON/4
Page 54
4. Policies Affecting Foreign Trade in Agriculture and Other Products
Question 135.  
Tonga will need to supply tables on domestic support and export subsidies as detailed in WTO
document WT/ACC/4:  when will these be available?
Answer:
As soon as possible.
Question 136.  
Tonga should submit its WT/ACC/4 domestic support to agriculture and export subsidy
schedules as soon as possible and prior to the first meeting of the Working Party.
Answer:
As per Question 135.
Question 137.  
In the memorandum, Tonga details the objectives of its agricultural policies without explaining
what form the policies and programs actually take:  can Tonga provide more detail on its
agricultural policies, particularly in relation to the types of support that are made available to
Tongan industry?
Answer:
Details of the customs tariff have been supplied to the WTO Secretariat in electronic form
(WT/ACC/TON/4/Add.1).  For information on quantitative restrictions and licensing requirements,
see relevant sections above.  Information on support measures and export subsidies will be provided
in the WT/ACC/4 tables.
Question 138.  
Can Tonga please confirm that it currently has no  export subsidy policies of the kind specified
in Article 9 of the WTO Agriculture Agreement, and that it is prepared to give a commitment
that such export subsidies will not be introduced in the future?
Answer:
This question will be addressed when the WT/ACC/4 tables are available.
Question 139.  
According to the Foreign Trade Memorandum, th ere are currently no measures in place to
support domestic agricultural prices (or) to subsidize exports of agricultural produce.  Is Tonga
willing to bind its export subsidy commitments at zero?
Answer:
This question will be addressed when the WT/ACC/4 tables are available.WT/ACC/TON/4
Page 55
Question 140.  
Please describe how the Tonga Development Bank encourages the development and
diversification of agricultural and commodity exports.
Answer:
Please see the answers to Questions 95 to 98 in the Section on Export Financing above.
V. TRADE-RELATED INTELLECTUAL PROPERTY REGIME
1. General
(c) Membership of international intellectual property conventions and of regional or
bilateral agreements
Question 141.  
What time-frame is envisaged by Tonga respec t to a possible adherence to international
conventions, such as the Paris, Bern or Rome Convention?
Answer:
Privy Council submissions will be lodged shortly for Tonga to join the Paris & Berne
Conventions.
Question 142.  
Does Tonga have any intentions of joining any of the international conventions and agreements
related to intellectual property, such as the Paris, Berne, and Rome conventions?
Answer:
Please see the answer to the previous question.
Question 143.  
Tonga should be prepared to implement fully a TRIPS-compatible regime for the protection of
intellectual property rights as of the date of  accession. We are pleased to see that Tonga is
already taking steps in this direction, by identi fying deficiencies in its existing intellectual
property regime. More importantly, Tonga has already submitted draft patent, industrial
design and trademark regulations to WIPO for review.  We were also pleased to see that a
revised law on copyright is also in the course of being drafted.
Answer:
Tonga gives very high priority to this matter and will make every effort to pass and
implement the necessary legislation. The timetable for this will depend to a large extent on the amount
of technical assistance that it receives. Such assistance will be necessary to complete the necessary
legislative changes and to carry out the steps necessary to implement and enforce the TRIPS
Agreement, e. g. passing the necessary legislation and putting in place the infrastructure required and
training personnel. Tonga's commitments in this area will be discussed in the Working Party.WT/ACC/TON/4
Page 56
2. Substantive standards of protection, incl uding procedures for the acquisition and
maintenance of intellectual property rights
(a) Copyright and related rights
Question 144.  
Please explain whether and how Tonga protects (pre) existing subject matters in the area of
copyright and related rights.
Answer:
The Copyright Act 1988 has not yet entered into force, as Regulations have not yet been
prepared.  Please see the Act, which has been supplied to the WTO Secretariat
(WT/ACC/TON/4/Add.1 refers).
Question 145.  
What is the term of protection for copyright and related rights?
Answer:
Please see the answer to the previous question.
Question 146.  
In its submission the Government of Tonga provides a list of necessary amendments to its
copyright legislation in order to comply wi th the TRIPS Agreement. Please specify the
envisaged time-frames and legislative steps for such amendments.
Answer:
The draft Copyright (Amendment) Bill is before Parliament and it is expected that the
Regulations will be in place before the end of the year.
Question 147.  
What is the expected timeframe for the amendmen ts proposed to the Copyright Act to bring it
into conformity with the WTO TRIPS Agreement?
Answer:
Please see the answer to the previous question.
(b) Trademarks, including services marks
Question 148.  
Please explain how well known trade and service marks are protected in the Industrial Property
Act 1994
Answer:
Please see Section 26 (e) of  the Act, which has been supplied to the WTO Secretariat
(WT/ACC/TON/4/Add.1 refers).WT/ACC/TON/4
Page 57
(c) Geographical indications, including appellations of origin
Question 149.  
Please explain how geographical indications ar e protected in the Industrial Property Act 1994.
Answer:
Geographical Indications are not protected by the Industrial Property Act 1994.
(d) Industrial designs
Question 150.  
Please clarify whether the Industrial Property Act 1994 is in force. Should this not be the case,
please specify when the Act will be operational.
Answer:
The Intellectual Property Regulations were passed in 1998. The Intellectual Property
Regulations have been passed  and the Act has been in force and operational since 1 February 2000.Both the law and the Regulations have been supplied to the WTO Secretariat
(WT/ACC/TON/4/Add.1 refers).
Question 151.  
(a) What legislation applies in the area of industrial property at present?
Answer:
The Industrial Property Act 1994, which deals with patents; utility model certificates;
industrial designs; marks, collective marks and trade names; and acts of unfair competition, and the
Industrial Property Regulations 1998.
(b) Please also explain what rights are granted to a right holder under that legislation.
Answer:
Please see the Act and Regulations, which have been supplied to the WTO Secretariat
(WT/ACC/TON/4/Add.1 refers).
Question 152.  
Please explain how textile designs are prot ected in the Industrial Property Act 1994.
Answer:
Please see the provisions of Part IV of th e Act on industrial designs (WT/ACC/TON/4/Add.1
refers).
Question 153.  
We hope that work on implementing the Industrial Property Act can be finalised in the near
future.  Can Tonga indicate the likely timing for implementation?WT/ACC/TON/4
Page 58
Answer:
The IPA has been in force and operational since 1 February 2000.
(e) Patents
Question 154.  
Please explain the scope of patentability, the ri ghts conferred by a patent and the criteria under
which non-voluntary licenses are granted.
Answer:
Please see the Industrial Property Act and the Industrial Property Regulations, which have
been supplied to the WTO Secretariat (WT/ACC/TON/4/Add.1 refers).
(g) Layout designs of integrated circuits
Question 155.  
How are layout designs of integrated circuits protected?
Answer:
These are not yet protected.
(h) Requirements on undisclosed information, including trade secrets and test data
Question 156.  
Please explain how undisclosed information is protected, including undisclosed test or other
data in the context of approving the marketing of pharmaceutical or of agricultural chemical
products.
Answer:
Tonga does not have any "Uniform Trade Secret Act" as in the United States. However, s3 of
Tonga Civil Law Act stipulates that, our Court shall apply the common law of England and the rulesof equity, where there is no applicable law in place in Tonga.
4. Enforcement
Question 157.  
Please specify what steps the Government of Tonga envisages introducing to provide an
effective system to enforce intellectual propert y rights, including border enforcement. Please
also provide a timetable for the respective legislative action.
Answer:
Please see the Industrial Property Act and the Draft Law on Copyright and Related Matters,
which have been supplied to the WTO Secretariat (WT/ACC/TON/4/Add.1 refers).
While Tonga gives very high priority to this matter, the timetable for legislative action will
depend to a large extent on the amount of technical assistance that it receives.WT/ACC/TON/4
Page 59
Question 158.  
Does Tonga envisage any difficulties in implementing and enforcing laws to give effect to
obligations under the WTO TRIPS Agreement?
Answer:
No difficulties of principle. However, as stated previously, Tonga will need technical
assistance to complete the necessary legislative changes and to carry out the steps necessary to
implement and enforce the TRIPS Agreement, e. g.  passing the necessary legislation, putting in place
the infrastructure required and training personnel.
5. Laws, decrees, regulations and other legal acts relating to the above
Question 159.  
Does Tonga intend to submit to the WTO Wo rking Party members for comment the revised
Industrial Property Act and the revised Copyright Act whilst it is still in a draft form?
Answer:
As stated above, the Industrial Property Act, the Intellectual Property Regulations and the
Draft Law on Copyright and Related Matters have been supplied to the WTO Secretariat
(WT/ACC/TON/4/Add.1 refers).
Question 160.  
Please provide to the Secretariat a copy of the draft regulations to the Industrial Property Act,
1994 for review by the Working Party.
Answer:
The Regulations have already been passed and have been supplied to the WTO Secretariat
(WT/ACC/TON/4/Add.1 refers).
Question 161.  
When available, please provide a copy of the draft revised law on copyright to the Secretariat
for review by the Working Party.
Answer:
This has been done.
VI. TRADE-RELATED SERVICES REGIME
1. General
Question 162.  
Could Tonga explain what are the services that  Tongans can undertake efficiently and why non-
Tongan participation are restricted in these services?WT/ACC/TON/4
Page 60
Answer:
As stated in our Memorandum, a 25 per cent minimum local participation is required in the
supply of services which can be undertaken efficiently by Tongans. Currently, this restriction applies
to the following services: retailing, tourism servi ces not requiring special equipment or skills, and
construction.
This restriction is needed for economic development purposes.
Question 163.  
(a) Please submit information on how trade in services is administered in Tonga, vis-a-vis
foreign service suppliers, in the format and within the parameters of WT/ACC/5.
Answer:
Tonga has very few laws, regulations or other policy measures affecting trade in services. It
hopes that its Memorandum and the answers to these questions give a good summary of these. It will
examine WT/ACC/5 with a view to providing answers to the questions that it contains.
(b) We look forward to receiving good commitments from Tonga in a number of sectors,
including tourism, financial services (including banking and insurance),
telecommunications, professional services (e specially law, accountancy, engineering and
construction services), and education.  We are willing to help Tonga to develop aservices schedule.  In the meantime, we seek more clarification on the following points:
- Legal services
Question 164.  
What are the requirements for enrolment on the ro ll of law practitioners held by the Supreme
Court and to join the Tonga Law Society?
Answer:
 The requirements for joining the Tongan Law So ciety as outlined in section 5 of the Law
Practitioner's Act 1989 are as follows:
1. the applicant has sufficient professional knowledge and experience and training in common
law jurisdiction. The minimum required qualification to appear in the Supreme Court is theDiploma in Law from the University of the South Pacific. This standard is soon to be
upgraded to a Bachelor's degree in Law (LLB) from a recognised University.
2. as to the person's character and his suitability to be a law practitioner. The application should
have at least three character references.
3. That the person intends to practice law in Tonga as a law practitioner.
To join the Tonga Law Society, applicant's name must be on the roll of Law Practitioners and
applicant must have a current practicing certificate
Question 165.  
Is the cross border supply of legal services permitted?WT/ACC/TON/4
Page 61
Answer:
Foreign legal services can be engaged in Tonga provided that leave of the Court is obtained.
Such leave is often obtained.
Question 166.  
Are foreign legal firms and lawyers able to prov ide consultations on legislation other than that
of their home state?
Answer:
Yes.  See also answer to Question 164.
- Accounting
Question 167.  
Are there any market access restriction s to practicing accounting in Tonga?
Answer:
There are currently no market restrictions to practicing accounting in Tonga.
Question 168.  
What are the requirements to practice as an accountant in Tonga?
Answer:
Currently, accountants who are locally based are required to obtain a licence from the
Ministry of Labour, Commerce & Industries. No queries are made to the Tonga Society of
Accountants in relation to licensing. There are currently no specific requirements for accountants who
come to Tonga to practice from off shore.
Question 169.  
Are there any operating restrictions on foreign accounting firms?
Answer:
There are no operating restrictions on foreign accounting firms.
- Engineering, computing and architecture
Question 170.  
What are the requirements to practice in each of these fields?
Answer:
There are no specific requirements for these fields except, that the practitioner must obtain a
licence to operate from the Licensing Unit of the Ministry of Labour, Commerce & Industries .WT/ACC/TON/4
Page 62
- Education
Question 171.  
What is the level of market access by foreign education service providers?
Answer:
The level of market access is high. In particular, religious institutions have established
secondary schools in Tonga such as the Church of Jesus Christ Later Day Saints (Liahona High
School), Seven Adventist Days Church secondary school (Beulah College), the Monfort Technical
Institution for training of young mechanics and technicians. Other higher academic institution
providers such as the University of the South Pacific Extension Centre provide courses at degree
level.
- Financial services
Question 172.  
Does Tonga permit the establishment of new foreign commercial banks and merchant banks?
Answer:
Yes.
Question 173.  
Does Tonga permit the establishment of new foreign life and non-life insurance companies,
insurance brokers and agencies servicing the domestic market (currently only reinsurance
broking is permitted in the domestic market), and insurance underwriting and management
companies servicing the domestic market?
Answer:
Yes.
Question 174.  
Does Tonga permit the establishment of wholly -owned subsidiaries of foreign banks, merchant
banks and other financial services companies and direct branching by these companies?
Answer:
Yes.
Question 175.  
Are there any numerical or geographical restrictions on financial services licenses?
Answer:
No.WT/ACC/TON/4
Page 63
- Telecommunications
Question 176.  
What are the criteria under the Broadcasting Act 180, by which an applicant's licence is
assessed?
Answer:
The Broadcasting Act 1989 (No. 15 of 1989) was created in order to allow operators (other
than the Tonga Broadcasting Commission) to licence television and radio services and stations.
The Acts grants a wide power to the King in privy Council to approve all broadcasting
licenses issued in the Kingdom. Privy Council also  has the power to decide what conditions shall
apply to each licence, including the power to alter and amend the conditions of the licence or to
revoke or suspend the licence.
The following are the main criteria which the government sets for the issuance of licence;
1. That all technical matters relating to frequencies and broadcasting of the service have been
examined by the potential operator in conjunction with the Tonga Telecommunications
Commission and that both parties are satisfied with the technical operating details. (Tonga
Telecommunications advice/opinion overriding that of the potential operator in areas of
conflict). This criteria also includes physical layout of the broadcasting station;
2. That potential operators have sufficient funds to establish and maintain such a service in the
Kingdom and to pay the annual licence fee (which is currently TOP$5,000 per annum);
3. That the licence is subject to revocation if the licence fee is not paid annually on or before
February 1 each year;
4. That if the licence is not utilised within 12 months, of its grant, then it shall lapse and no
further applications for that applicant;
5. The potential operator is also expected to exercise 'self censorship' bearing in mind the
cultural sensitivities of the Kingdom of Tonga and the laws of Tonga - the Broadcasting Act
carries a 'standard' censorship section.
6. The licence is not transferable without the approval of the Privy Council.7. The licensee must agree to provide for Government the free broadcast of emergency public
notices e.g. Government national emergencies, emergency medical appeals, disaster
warnings.
The term of the licence is specified under the Act as follows:
- 5 years for the first grant, thereafter, the licence is renewable every two years.
It should be noted however, that the Broadcasting Act will be repealed if the new
Communication Bill becomes law. It is envisaged that this Bill will become law by the end of thisyear (2000).
Under the Communication Bill, the global trend of classifying all telecommunications matters
under the one process of  'convergence' has been effected. All communication licence shall be issuedWT/ACC/TON/4
Page 64
under this law, including television, radio, internet service operators, mobile phone operators  etc. The
above mentioned criteria has been incorporated in to  the Bill, with the addition that licensees in some
circumstances shall be requested to provide development plans with their applications.
Question 177.  
(a) We are interested to learn about the leve l of competition in the Telecommunications
sector.
Answer:
Up until very recently, the Government had a monopoly on all telecommunication services in
the Kingdom.
Domestic Services
The Tonga Telecommunications Commission, statutory board, established under the
Telecommunications Commission Act (Chapter 96) is empowered to operate, maintain and develop
the domestic telecommunications system in the Kingdom. The Prime minister is the ex officio
Chairman of the Board. They are monopoly providers.
International Services
Government has had a franchise agreement for the last 22 years with Cable & Wireless, to
operate all international telephone services for the Kingdom. In 1995 Government authorized Cable &Wireless to be the only internet service provider for Tonga.
Since July 2000, Cable & Wireless no longer operate international telephone services etc for
the Kingdom.  A company, Tonga Telecommunications International Ltd. now operates the
international services formerly provided by Cable & Wireless.
The monopoly as an internet service provider has been broken this year, with the government
permitting any ISP fulfilling government criteria  to apply for a licence from the government.
(b) Are there any majority public owned Telecommunications companies?
Answer:
There is only one Telecommunication Company operating in Tonga. The Tonga
Telecommunications International Ltd. is a private company partially owned by the Government.
Question 178.  
On Telecommunications, whilst the licensing req uirement seems clear enough there appears to
be an additional requirement to obtain cabine t approval.  Could Tonga explain what are the
criteria applied in granting such approval?
Answer:
Under the provision of Telecommunication Services, such services have been a monopoly in
the Kingdom - so the question of licensing telecommunications operators has not arisen. There is aprovision in the Licensing Act (as amended) for licensing telecommunications operators, but this
provision has never been used. Also there are currently different  statutes, covering various licenses
for television and radio broadcasting services.WT/ACC/TON/4
Page 65
However, Government intends to issue all telecommunication licenses under a new Act as
provided in the Communications Bill referred to abov e. Incorporated within this new Bill are existing
government policies (as approved by the Privy Counc il) on licensing set out in the answer to question
176 above.
All applications are tabled in cabinet/Privy Council as formality, it gives the Ministers an
opportunity to monitor developments in this area a nd to ensure that government policies are evolving
in accordance with objectives and also to ensure that there is a fair playing ground for all operators.
- Professional qualifications
Question 179.  
In the Memorandum, it is stated that "Ton ga does not have any national professional
qualifications standards, and where appropriate, relies on qualifications issued by competent
authorities and professional bodies in other co untries..." (p.31, l.13).  Could Tonga confirm that
its laws and regulations on certification for foreign qualification are consistent with the
GATS XI.
Answer:
Yes.
Question 180.  
It is also stated that, "legal practitioners are regulated by the Law Practitioners Act, 1989...".
Can we understand this Act provides for a "lawyer system" in Tonga, which consists of
qualification requirements, qualification procedures, etc.? Are there any rules or framework to
allow foreign lawyers to provide legal services in  Tonga? In the case of the above, what are the
requirements for a foreign lawyer to be able to provi de a legal service?  What is the scope of the
legal services that foreign lawyers are allowed to provide?  Is there any limitation in the
activities of foreign lawyers (e.g. employment, partnership)?
Answer:
Please see the answer to Question 164 above.
2. Policies Affecting Trade in Services
Question 181.  
We welcome the absence of MFN exemptions and the relative absence of national treatment
limitations.  As part of the accession negotiation process, Tonga will be asked to address areas of
regulation where there is a lack of transparency  or uncertainty affecting services sectors or
where administrative discretion inhibits trade:
(a) Can Tonga provide comprehensive details of  both current and any proposed regulatory
frameworks for the services industries?
Answer:
See answers to previous questions.WT/ACC/TON/4
Page 66
(b) Can Tonga clarify the basis for restricting or  regulating the level of foreign participation
in some industries?  What legislative basis is there for such decisions?
Answer:
Please see the answer to previous questions.
(c) Noting the provision for a minimum 25 per cent local participation in the sectors
specified by the memorandum, what is the basis for the apparent exclusion of foreign
participation in the fishing industry?
Answer:
While foreigners are not excluded from particip ating in the fishing industry, Tonga would like
to ask where the fishing industry is to be found in the Services Sectoral Classification List.
4. Most-Favoured-Nation Treatment
Question 182.  
It is stated that in the Memorandum that, "A s regards the recognition of foreign professional
qualifications, applications are treated on thei r own merits if they involve countries whose
qualifications are not specifically cited in the relevant Acts."  Could Tonga elaborate on the
phrase, "treated on their own merits".  Does it mean that such application is treated and
approved on an MFN basis?
Answer:
Yes. The criterion is the standard of the qualification concerned.
VII. INSTITUTIONAL BASE FOR TRADE AND ECONOMIC RELATIONS WITH
THIRD COUNTRIES
1. Bilateral or plurilateral agreements relating to foreign trade in goods and trade in
services
Question 183.  
According to Annex IV of the Memorandum on Foreign Trade, the South Pacific Regional
Trade and Economic Co-operation Agreement (SPARTECA) is a preferential non-reciprocal
trade agreement covering the Forum Island countries with Australia and New Zealand.  Theagreement offers duty free and unrestricted or concessional access for virtually all products
originating from the Island member countries.  Do es Tonga offer any duty-free or concessional
access to any products originating from Australia or New Zealand?  If yes, please identify the
products, including HS numbers, and describe the preferential access accorded to them.
Answer:
No, Tonga does not offer any duty-free or concessional access to any products originating
from Australia or New Zealand under this Trade Agreement.
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