Deputy Prime Minister and Minister for Finance Professor Biman Prasad says they do not expect a major fallout for Fiji’s economy in the short to medium term following the 32 percent ‘reciprocal tariff’ on Fijian exports to the United States, which comes into effect on Wednesday.
In an interview with ABC’s Pacific Beat, Professor Prasad says however, in the long term, they do not know how the whole process of globalization and the push for freer trade over the years is going to be affected.
He says there are a lot of uncertainty globally and how the transmission mechanisms are going to work through trade, remittances and tourism is yet to be seen.
When questioned about what the impact will be on Fijian exports, especially water, Professor Prasad hopes demand for exports like water, kava and turmeric will not be affected but says more analysis is required on how consumers in the U.S. behave.
He says as a region and as a country, they will respond with appropriate economic policies.
Professor Prasad says some people are predicting that China would look for alternative sources of market, and therefore there will be cheaper sources of imports available.
He says all these are elements that are still being analyzed, and it will be a matter of time before these things become more clearer.
The Deputy Prime Minister says in the process, this is an opportunity for Pacific Island countries, including Australia and New Zealand to look at a much more deeper, meaningful regional integration of economic, investment, employment and travel policies.
He says discussion on visa-free Pacific should be on the table given the global uncertainties.
Meanwhile, Professor Prasad has stressed that trade deficits are not tariffs, and using a bilateral trade deficit to calculate and impose a reciprocal tariff — as in Fiji’s case — is incorrect.
He says this leaves room for discussion and for changing some of the perceptions based on the calculations used to impose the tariff.
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