The European Union and Papua New Guinea have enjoyed more than 40 years of partnership. The following is an overview of the relations between the European Union (EU) and Papua New Guinea (PNG) in a number of areas, including political, economic, trade relations, rural entrepreneurship, investment and trade, water supply, sanitation and hygiene (WASH) and education.
The partnership between the EU and Papua New Guinea (PNG) is guided by the principles and objectives of the Cotonou Agreement and its successor Agreement for which negotiations concluded in 2021. This Agreement covers areas such as political dialogue, trade and development cooperation, including respect for democracy and human rights principles.
The partnership between both sides is strong due to an ever increasing political dialogue, where they have frequently engaged and exchanged on many topics of mutual concern such as human rights, gender issues, elections, matters relating to positions taken in the United Nations or visa matters including discussions of more development cooperation and consistently better aid delivery.
The EU’s ultimate goal is to build stronger political relations with PNG, and the entire Pacific region, while supporting good governance, security and sustainable development.
For the last 12-15 years, Papua New Guinea has embarked on major structural reforms, policy development and adjustments in the different sectors of the economy to support the diversification of the economy.
Apart from minerals, agriculture still represents about a third of PNG’s GDP. It also provides employment to nearly 80% of the population through combination of both cash crop and subsistence agriculture. It looks set to remain the backbone of the economy.
As exports comprise some 90 % of PNG’s GDP, trade liberalisation is an integral part of achieving strong and sustained economic growth, and poverty reduction.
PNG was the first country in the Pacific region to sign the 2009 interim Economic Partnership Agreement (iEPA) with the EU. Under this agreement, all PNG exports can access the EU market of 500 million consumers duty and quota free for all products made in PNG.
To help Papua New Guinea tap on this opportunity, the European Union in line with the PNG Development Strategic Plan 2010-2030, has put into place a Trade Related Assistance Programme, which aimed to increase PNG capacities to benefit from trade and investment with Europe and the rest of the world. The EU supports the implementation of both the EU-Pacific EPA and the National Trade Policy with a special focus to support the operationalisation of the National Trade Office.
To develop and unleash the productive and employment potential of the rural economy, the EU is also increasing trade opportunities for rural and costal entrepreneurs by reducing bureaucracy, rules and regulations.
See Rural Entrepreneurship, Investment and Trade below.
Economic and Trade Cooperation
With a population of more than 9million and an annual GDP of over USD 20 billion, PNG has by far the largest economy in the Pacific region.
After a decade of fast growth which brought Papua New Guinea into the category of lower middle-income country, PNG’s economic growth declined from 2016 to 2018 resulting from falls in commodity export prices, the finalisation of major Liquid Natural Gas (LNG) projects and natural disasters. Yet despite the initial impressive growth, the country has one of the highest rates of child and maternal mortality, and the lowest rates of school attendance and literacy in the Asia-Pacific region.
PNG’s economic outlook is improving through the PNG Vision 2050 and Strategy Plan 2010-2030. These plans aim to both reduce the country’s excessive reliance on mineral resources and support the diversification of the economy thus operating a paradigm shift from brown to green economy (Stars). The EU supports the implementation of PNG strategies and the diversification of PNG’s economy including a special focus on both informal economy and MSMEs.
Technical and Financial Cooperation, Development Cooperation
Papua New Guinea has received over 2 billion kina in the form of development support from the European Union through the European Development Fund (EDF) since 1987. Further support has been provided through dedicated thematic lines on relevant issues such as democracy, rule of law, gender based violence and support to non-state actors and community based organisations.
A number of projects have been implemented in PNG under the 10th European Development Fund (2008-2013) with a funding of Euro 104 million (K450 m) which focused on three sectors:
- Rural Economic Development.
- Human Resource Development and.
- Complimentary Support.
Trade was also an important non-focal sector, essential to enhance PNG’s development and to this effect support was provided to establish PNG’s first Trade policy following PNG’s engagement with European Union in the interim Economic Partnership Agreement.
PNG moved into the 11th EDF from 2014 to 2020 with a total funding of Euro 154 million (K530 m). The focus was on three sectors:
- Rural Entrepreneurship and Investment & Trade.
- Water, Sanitation and Hygiene and.
- Policy Reform and Good Governance and Complimentary Support.
The European Union has been exploring a large scope of implementation modalities for its partnership with PNG. Many years in the making the European Union qualified PNG to receive support through Budgetary Support, grant funding made available directly to the Treasury to enhance fiscal space and allow implementation of relevant and credible policies, with a commonly agreed set of objectives to achieve during the life of the support. This specific support targets good governance, justice and the fight against corruption. The European Union in partnership with UNICEF continue to roll out the Water and Sanitation program which is expected to benefit about 170, 000 people.
Support Rural Entreneurship investment and trade - STREIT
SAPOT LONG RUREL BISNIS , INVESMEN NA TRED This programme is also locally known as EU STREIT PNG
This holistic programme assists agripreneurs to develop, rehabilitate and expand production and trade of Cacao, Vanilla and Fisheries in PNG provinces of East Sepik and Sandaun.
With a contribution from EDF 11 of EURO 82M, STREIT is the largest grant-funded programme of the European Union in the country and in the Pacific sub-region. It supports not only entrepreneurs and farmers directly in the respective Value Chains, but it also helps to improve the enabling environment for these value chains: access to markets/communication, access to finance and financial inclusion, telecommunications, digitalisation and renewable energy.
This programme is implemented directly from the Sepik, by teams from the FAO (overall leadership), ILO, UNCDF and UNDP working closely with both Provincial authorities responsible for the sectors of intervention (Local branch of the Department of Agriculture and Livestock, Cocoa Board, Spice board and Fisheries.
The programme is also focusing on being inclusive through dedicated activities for women and youth.
Some activities dealing with the environment for business and trade as well as digitalisation have a PNG wide scope.
For the last 10 years, the European Union in close cooperation with the Government of Papua New Guinea has been actively supporting education, including technical and vocational training in PNG with a total grant funding of approximately 160 million kina (39 million EUR).
One of the recent actions under the European Union Human Resources Development Programme 2 has been the construction of infrastructure and the supply of equipment to 10 TVET centres in various districts of PNG.
The centres have been built with the aim of creating a conducive environment where certified instructors deliver competency-based trainings in modern buildings, with the use of proper tools and equipment.
The 10 EU-funded TVET centres have been completed and commissioned for use in 2021.
Improving technical and vocational training, thus reducing unemployment and leading to a more prosperous society, is a crucial component of Vision 2050 and the PNG Strategic Development Plan 2010-2030. It is also a priority for the European Union at the global level, critical to increasing employment and reducing poverty.