The political economy of Melanesian trade integration

Abstract

In 1993 the Pacific islands' first multilateral preferential trade agreement was signed by Papua New Guinea, Solomon Islands and Vanuatu. The agreement was signed in an inhospitable political climate, with Papua New Guinea and Solomon Islands on the verge of military confrontation over the civil war on Bougainville. The terms of the agreement reflect the difficult political climate at the time, as well as the goodwill between the Melanesian Spearhead Group states. Given the limited trade complementarity and small volume of intra-country trade, the treaty will only become significant once the parties extend it to a full free trade agreement and are willing to live with the resulting economic discipline.