FSM President Mori signs into law new tax reform deadline, “sunset clause”

From left: Governor Lyndon Jackson, Kosrar; Vice President Alik L. Alik, Speaker Dohsis Halbert, Governor John Ehsa, Pohnpei; Lt. Governor Ritis Heldart, Chuuk; Governor Sebastian Anefal, Yap. President Mori signing the law.

FSMIS (July 19, 2013): FSM President Manny Mori signed Congressional Act no 18-06 into public law earlier today after Congress passed the legislation in final reading yesterday, July 18. The signing was witnessed by FSM Vice President Alik L. Alik, Speaker Dohsis Halbert, FSM Congress, Governor John Ehsa of Pohnpei State, Governor Lyndon Jackson of Kosrae State; Governor Sebastian Anefal of Yap State and Lt. Governor Ritis Heldart of Chuuk State.

The new public law, designated Public Law no. 18-06, extends the “Sunset Clause” deadline under the Revenue Administration Act (RAA) from July 19, 2013 to September 30, 2013. It is the second change after it was first pushed back about three months ago.

In his signing message, President Mori said, “I wish to thank the 18^th Congress for passing the act as this congressional act will grant more time for the States to thoroughly consider and approve the necessary legislation that will fully implement the tax reform”.

The State Governors and the Lt. Governor of Chuuk were in Pohnpei for the July 18 meeting of the Tax Reform Executive Steering Committee (ESC). The ESC is chaired by Vice President Alik, and it oversees the development and activities of the Tax Reform Program.

The States of Yap and Pohnpei have yet to pass their value added tax legislations in the manner expressed under the RAA sunset clause. However, Vice President Alik as Chairman of the ESC recently expressed hope that the States will find more time to maintain progress with the new deadline now in place.

The signing of the “extension legislation” ensures that works of over eight years are not discarded at the end of the day.

A little snack, keeping tax reform movement on the table for all five governments in the FSM

For further information, please contact the Tax Reform Program office at 320-2640/5852.

Micronesian Presidents endorse Ernguul Communiqué, recommit region-wide cooperation

from left: FSM President Manny Mori, Palau President Tommy Remengesau Jr., RMI President Christopher Loeak

FSMIS (July 19, 2013): The Presidents from the Federated States of Micronesia (FSM), the Republic of the Marshall Islands (RMI) and the Republic of Palau (Palau) concluded their annual Micronesian Presidents Summit held in Koror, Palau on July 12, culminating in the signing of the Ernguul Communiqué and other accompanying documents. Ernguul is the old name for Koror.

FSM President Manny Mori, RMI President Christopher Loeak and Palau President Tommy Remengesau Jr. discussed a range of issues such as compact-impact, marine surveillance, telecommunications, the Micronesian Challenge, biosecurity, and aviation issues.

The Presidents also exchanged views in preparation for the upcoming Pacific Islands Forum in Majuro in September and the 68^th United National General Assembly in New York. The Presidents acknowledged challenges faced and progress made with regards the United Nations Millennium Development Goals (MDG) for all member States with completion deadline of 2015. However, they agreed to look beyond 2015 and call on the global community “to build on the current MDGs, moving beyond meeting basic human needs in order to promote dynamic , inclusive and sustainable development”, along with the incorporation of ocean conservation indicators.

Reflecting the region’s vast “oceanscape”, intertwining in-country and region-wide concerns pertaining to the Micronesian Challenge, the Protected Area Network, Marine Surveillance, and Climate Change dominated the Presidents’ interactions. Given their dominance, the Presidents affirmed the need to maintain high alert in these named vital areas.  In this regard, the Presidents saw the need to appeal further to the United Nations to use its various mechanisms to ensure that the three country’s ocean conservation and protection programs are “mainstreamed into the core policies and programs of the UN”.

Endorsing the Ernguul Communique at Palau Pacific Resort

Additionally, this year’s Summit also provided the opportunity for the Presidents to collaboratively address new matters. For instance, two issues in direct relation to the United States Federal Aviation Administration (FAA) were raised, namely, the FAA Airport Improvement Project (AIP) discretionary funds eligibility and the recent FAA unilateral decision to transfer the Western Pacific Region from the jurisdiction of the FAA Los Angeles office to its International Affairs Office in Tokyo. On the former, the Presidents sent a joint letter to the US Government seeking support for the extension of AIP eligibility beyond 2015 to maintain overall aviation security and contribute to other industries and transport services that rely on efficient air transportation system. With regards the latter, they directed their transportation officials to further seek clarification from FAA on possible changes in level of assistance to Micronesia as a result of the shift in terms of responsible office from Los Angeles to its Tokyo-based International Affairs Office. 

Another new item presented was a FSM proposal for RMI and Palau to consider a regional airline  with an envisioned required capitalization of around $6 million to create air links between the three countries and open up a market source mainly through the Asia-Pacific region. The Presidents noted the interest and acknowledged that auxiliary infrastructures and services would have to be concurrently addressed to ensure the sustainability of such complex endeavor. Key personnel, mainly from the FSM and the RMI, have been pursuing this interest with expert assistance from Asia-Pacific partners.  

FSM and Palau maintained their long-standing intent to mutually pursue improvement in their telecommunication infrastructures through responsible government agencies, the FSM Telecommunications Corporation, the Palau National Communications Corporation, and the Caroline Cable Corporation (CCC) through fiber optic connectivity for the longer term and other new technologies that might lift current situations in the immediate term. The two countries remained in contact with the World Bank for specific requirements and conditions in exchange with technical and probable financing support on the fiber optic options.

Other than the letter to the US Government on FAA matters, the Presidents also sent joint letters to the US Department of the Interior requesting support for an FAS Survey of Migrants; the Conservation International, expressing appreciation for support to the Micronesian Challenge and requesting completion of matching commitment to the Marshall Islands; the US Department of Defense regarding invasive species management priorities and continued involvement in the Micronesia Regional Invasive Species Council (RISC); and the US Department of Homeland Security and the Commission on Customs and Border Protection regarding the Customs Academy.

Issues concerning the US rating system on human trafficking for all countries were expressed. In the end, the Presidents recommended government support for advocacy and awareness campaigns on human trafficking by NGOs in their countries.

Finally, the FSM and the RMI expressed support toward having the proposed Compact between Palau and the United States, which has been before the US Congress for over five years, be expedited as necessary to bring conclusion to the process.

For further information, call the FSM Public Information Office at 320-2548 or email fsmpio@mail.fm.

Tripler Army Medical Center in Honolulu Provides Health Care in Chuuk and Yap

FSM Dept. of Health and Social Affairs: A medical team from Tripler Army Medical Center (TAMC) in Honolulu, Hawaii visited Chuuk and Yap in the Federated States of Micronesia from April 10-28, 2013.  The team specialized in diseases of the ear, nose, and throat, was lead by Dr. Philip Littlefield, and staffed by Dr. Kelly Groom, Dr. Denby Fukuda (an Audiologist), and by Physician Assistant Jeff Robin.

In Chuuk (Figure 1), the team saw 223 patients and provided 24 endoscopic exams, 37 ultrasounds, and operated on 12 patients.  The estimated cost of services the team provided in Chuuk (clinic and operating room) was $46,098.84, excluding hospital costs and personnel time.

In Yap (Figure 2), the team saw 184 patients and provided 9 endoscopic exams, 15 ultrasounds, and operated on 15 patients.  This was about $24,495 worth of services, again not taking into account hospital and personnel time costs.

(Yap). From Left: PA Robin, Dr. Littlefield, Dr. Robert Paul, and Dr. Groom

All together, the team provided an estimated $80,000 worth of direct medical care to Chuuk and Yap within two weeks.  If all patients seen were treated in Honolulu or elsewhere, the total cost would have easily reached at least a quarter of million dollars.

According to the team, the betel nut was the main cause of preventable disease that they evaluated, but most of the cancers they saw were too advanced to operate on.  Oral cancers would no longer be a problem in FSM if betel nut chewing were eliminated.  This would save limited financial resources as well.

While the FSM government appreciates the services provided by the team, it hoped the team had good experience in the FSM.  As summed up by  Dr. Littlefield, the team leader, “It was a pleasure coming down there and taking care of your people.  It is a win-win for both sides.  You get badly needed medical care at a good price, and we get to do interesting surgeries, not to mention the amazing cultural exchange".

Funding for this trip was made possible from FSM Department of Health and Social Affair’s share of the Amended Compact funding.  Coordination and facilitation of the teams’ visit was also made by FSM Department of Health Services in consultation with the relevant FSM State hospitals.

FSM Attends the Pacific-African Caribbean Pacific States (PACPS)-European Union (EU) Economic Partnership Agreement (EPA) Negotiations in Brussels, Belgium

FSMR&D (July 16, 2013): From June 24 – July 5, 2013, the PACPS, which includes the FSM, met with the European Commission in Brussels, Belgium, to continue negotiations for the comprehensive EPA. The EPA is a trade agreement that is being negotiated to replace the non reciprocal trade preferences granted by the EU to ACP Countries under the Lome-Cotonou Agreement, which are not compatible with the laws and principles of the World Trade Organization (WTO).

The meeting, commonly referred to as the Joint Technical Working Group (JTWG) Meeting, was convened to progress discussions on the key outstanding issues, bearing in mind PACPS’ Leaders mandate to conclude the EPA negotiations by the end of 2013. The Meeting was based on preliminary discussions that took place in a smaller Technical Working Group (TWG) in December 2012 and March 2013.

In general, while there was extensive exchange of information and open discussions, the June-July JTWG Meeting produced mixed outcomes.

While there were some progress on product specific Rules of Origin, and Sanitary and Phyto Sanitary and Technical Barriers to Trade, and market access offers submitted by PACPS, both sides still have divergent views on key areas: for example, PACPS wanted a 20 to 25 year transitional period to remove duties on imports originating in the EU; meanwhile the EC wanted a shorter period.

One point of fundamental disagreement between the two Parties was fisheries, in particular the conservation and management of fisheries resources. While PACPS expressed their willingness and readiness to make commitments to transparency and procedure regarding their conservation and management measures, the EU wanted specific commitments on substantive aspects of the Vessels Day Scheme (VDS). PACPS emphasized that this was a non-negotiable issue for those Countries that are Parties to the Nauru Agreement like the FSM. Instead, PACPS suggested that issues related to the VDS should be separated from the EPA process and dealt with in the appropriate regional and sub-regional forum. Other contentious issues are provisions on the export taxes, the non execution clause, development cooperation, and infant industry protection.

Given the disagreement between PACPS and the EU on fisheries issues, the EC requested more time to undertake a comprehensive consultations with its 28 Member States as well as a re-assessment of the overall EPA negotiations process, before any dates for the next round of negotiations are finalized. The EC also indicated that the internal evaluation will determine their response to PACPS request for global sourcing rules of origin for fisheries products, which is PACPS’ main demand in the EPA negotiations.   

In effect in the EPA negotiations, PACPS are seeking extension of global sourcing rules of origin granted for products of HS 1604 and 1605 (cooked and canned fish) to products of for HS 0304 and 0305 (fresh and frozen fish fillets) in addition to the global sourcing rules of origin. Global sourcing rules of origin would ensure that fish caught anywhere by any fishing boat regardless of its flag state, would qualify for duty free entry into the EU market as long as it is landed and processed on shore any PACPS.

 
The FSM representatives to these meetings were Mrs. Camille Movick-Inatio, Assistant Secretary for Trade and Investment, Mrs. Rhea-Moss Christian, Chief Compliance Manager, NORMA, Mr. Aaron Warren, Assistant Attorney General, FSM Department of Justice, and Mr. Jean Bertrand Azapmo, Trade Adviser under the Commonwealth Secretariat, Hub & Spokes Programme, assigned to FSM R&D. 

For information, contact the FSM R&D at 320-2646 or email fsmpio@mail.fm