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After a tumultuous 2021, all corners of the world are now focusing their recovery from the COVID-19 pandemic around ways that support the people and protect the planet. This is particularly relevant in Pacific Island developing States such as Tuvalu.

As a small atoll nation in the Pacific with a population of just 10,000 people scattered on eight low-lying islands, Tuvalu is facing multiple development challenges. Apart from severe supply chain constraints due to the pandemic, Tuvalu is also one of the countries most vulnerable to climate change and faces a number of environmental challenges including sea-level rise, salt-water inundation and land degradation. This is compounded by a concentration of its population on Funafuti, the main island, creating a serious waste management problem and contamination of potable water due to this waste.

Ensuring trade-led sustainable development

Tuvalu faces many challenges to its participation in global trade. The main ones are its small size, small resource base and the great distance from major markets with prohibitive transport costs. It has a large trade deficit with very few exports – these being primarily fisheries products.

By formulating a new Trade Development Strategy, built on the provisions of Tuvalu’s National Development Strategy (Te Kete) 2021-2030 and Tuvalu’s Trade Policy Framework of 2016, there are opportunities to derive benefits from trade while ensuring environmental sustainability.

In the last quarter of 2021, ESCAP closely worked with the Government of Tuvalu to prepare a National Trade Development Strategy, in partnership with the Enhanced Integrated Framework (EIF) for Trade-Related Assistance for the Least Developed Countries.

The new Trade Policy Framework recognizes the importance of developing exports and strengthening domestic markets in sectors such as agriculture, fisheries, tourism and labour mobility. The National Development Strategy (Te Kete) recognized that Tuvalu needed to provide a conducive business environment to encourage private sector growth and local exports and to reduce reliance on imported food. It proposed the development of a sustainable commercial fishery, optimizing revenue from Tuvalu’s waters and the development of eco-tourism.  

These new initiatives and arrangements aim to build common understanding and align strategic priorities with Tuvalu’s Trade Development Framework, which highlights the untapped trade potential.

The Timeless Tuvalu campaign provides another opportunity to develop niche markets for the tourism sector as well as opportunities in the e-commerce sector with public-private partnerships. For Tuvalu, labour mobility schemes with partnering countries would continue to be an important sector to develop further.

At the product level, breadfruit chips, banana chips, kaleve-kula (red toddy syrup), virgin coconut oil, salt fish and smoked fish are vital options to generate jobs and revenues for local communities, which is central to the post-pandemic recovery strategy. These products are currently produced for the domestic market and could be increased for exports.

Connecting countries  

Tuvalu’s Department of Trade has a vision of ‘Making trade an engine of economic growth’. Its mission is to ‘Build productive capacities of Tuvalu and promote domestic and international trade’. But trade must be linked between and among countries in the Pacific and beyond.

Tuvalu was already a signatory to a few sub-regional trade agreements but has so far been unable to benefit from these. The new Trade Development Strategy proposes to further accelerate partnerships at the subregional and regional trade agreements.

The new generation of trade agreements would also require Tuvalu to raise its trade negotiation skills and allow an improved export product base for it to benefit more from these trade agreements and multi-country trade partnership arrangements.

From strategy to action

The Strategy is only a first step. There is a lot of work needed for Tuvalu to benefit from global or even regional and multi-country trade systems. But there are many partners ready to offer their support.

For the trade strategy to succeed, it is important to set up capacity development programmes for current and potential future entrepreneurs. Building a culture of business and trade is, in itself, a meaningful development opportunity for Tuvalu.

The Strategy’s action plan suggests ways to improve business education and training, and encourages modules for students and school leavers. The growth in entrepreneurship should be seen as a future of trade in the country.

The SWOT (strengths, weaknesses, opportunities and threats) analysis on four main identified areas of focus also offers several recommendations related to workforce, infrastructure and regulatory framework to promote business and investment in the country.

Looking ahead

Tuvalu’s new Trade Development Strategy continues to focus on the Sustainable Development Goals and the SAMOA Pathway as the global blueprints for the sustainable development of small island developing states in the Blue Pacific.

By strengthening multilateral, regional and subregional cooperation arrangements, Tuvalu’s economies and communities are poised to reap the benefits of inclusive, resilient and sustainable cooperation.

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Sudip Ranjan Basu
Deputy Head and Senior Economic Affairs Officer
Taukelina Finikaso
Former Minister for Foreign Affairs, Trade, Tourism, Environment and Labour, Tuvalu
Darryl Ikbal
EIF Project Manager, Department of Trade, Tuvalu
Subregional Office for the Pacific +679 331-9669 [email protected]