Micronesia

Location : Oceania, island group in the North Pacific Ocean, about three-quarters of the way from Hawaii to Indonesia

Capital : Palikir

Languages : English (official and common language), Trukese, Pohnpeian, Yapese, Kosrean, Ulithian, Woleaian, Nukuoro, Kapingamarangi

 Area : 702 sq km

Land Use : arable land: 5.71%; permanent crops: 45.71%; other: 48.58% (2001)

Natural Resources : forests, marine products, deep-seabed minerals, phosphate

Population : 108,105 (July 2005 est.)

Population below poverty line 26.7% (2002 est.)

International Organisation participation : ACP, ADB, FAO, G-77, IBRD, ICAO, IDA, IFC, IFRCS, IMF, IOC, ITU, MIGA, OPCW, PIF, SPARTECA, UN, UNCTAD, UNESCO, WHO, WMO

GDP per capita : U$2,000 (2002 est.)

GDP Real Growth Rate : 1% (2002 est.)

GDP sectoral composition : agriculture: 50%; industry: 4%; services: 46% (2000 est.)

Industries: tourism, construction, fish processing, specialized aquaculture, craft items from shell, wood, and pearls

Agriculture - products : black pepper, tropical fruits and vegetables, coconuts, cassava (tapioca), betel nuts, sweet potatoes; pigs, chickens

Exports : U$19 million (f.o.b.)

Exports - commodities : fish, garments, bananas, black pepper

Exports - partners : Japan (80%), US, Guam

Imports : U $133 million f.o.b. (FY99/00 est.)

Imports - commodities : food, manufactured goods, machinery and equipment, beverages

Imports - partners : US (73%), Australia, Japan (2000)

QUALITATIVE TRADE PROFILE  

The Federated States of Micronesia (FSM) is heavily reliant on preferential market access from its partners. Of the various agreements, FSM places the greatest emphasis on the Compact of Free Association that it has signed with the United States. Under this agreement, FSM has duty-free access to the United States and is provided with U$100 million in aid annually through to 2023 and is allowed access to various US domestic federal programs. In return the US gets exclusive defence rights to FSM.

The public sector is the main employer, accounting for over half of the workforce and over 40% of GDP. The most important private sector is the fisheries sector which account for over 80% of export revenue. Against this background it is hardly surprising that tariffs are not an important source of budgetary revenue. Tariffs vary widely. The lowest tariffs are 3% ad valorem on foodstuff. Cigarettes, perfumery, cosmetics and other toiletries; soft drinks, drink mixes, drink preparations, coffee, tea, and non-alcoholic beverages; beer, malt beverages, wine, and citrus fruit attract a tariff of 24%, tobacco attracts a tariff of 50% and laundry bar soap 50%. Most other products attract subject to a duty of 4%.

INSTITUTIONAL FRAMEWORK 

FSM is a confederation with strong state powers. Foreign Affairs is one of only two areas in which the federal government has jurisdiction. The Secretary for Foreign Affairs is in charge of trade policy.

TRADE AGREEMENTS

Bilateral

FSM has signed a Compact of Free Association (CFA) with the United States, which provides non-reciprocal duty free access, as well various entitlements to financial assistance, for FSM.

Regional

FSM is a member of the Pacific Islands Forum. It has also signed the Pacific Islands Countries Trade Agreement (PICTA), under which member countries agree to liberalize trade in goods. It also has duty-free access to the Australian and New Zealand markets under the South Pacific Agreement on Regional Trade and Economic Co-operation (SPARTECA). FSM was not a signatory to the Lomé Convention but has signed Cotonou and as such is currently negotiating an Economic Partnership Agreement with the EU through the Pacific configuration. It is currently negotiating an Economic Partnership Agreement with the EU through the Pacific configuration.

Multilateral

FSM is neither a member nor observer of the WTO.

Source: UNCTAD, World Fact Book.