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Given the small sizes of the population of most FICs, the lack of economies of scale and their geographical isolation which increases the cost of doing business, it is generally accepted that the FICs cannot become centres of manufacturing excellence. By contrast, the advances in technology afford them an opportunity to become active participants in services trade. The services sector is already the most dominant sector in almost all of the FICs. It accounts on the average about 65 per cent of the GDP of most FICS. In some FICs, it is approaching 85 per cent underlying the sector’s importance to the economies of FICs. It is also increasingly a major source of employment. Trade in services cover a broad range of sectors, including business services, communication services, construction and related services, financial services, telecommunications and tourism, travel and related services.

In most FICs, the tourism sector is dominant but there is the determination to diversify into other services sectors where the FICs may have a comparative advantage such as business services and financial services. The PACER Plus Parties are conscious of the potential of this sector to make a positive contribution to the economic growth and sustainable development of the FICs and are committed to liberalising trade in services with a view to promoting competition and enhancing the participation of FICs in services trade. The Parties intend to build on the WTO General Agreement on Trade in Services and the Pacific Island Countries Trade in Services Protocol. In that regard, there would not be an a priori exclusion of any services sector or mode of supply. There will be the obligation to respect the non-discrimination principle and commitment to adopting measures which would enhance transparency and create an enabling environment for service suppliers to operate across borders.

The Parties are committed to enhancing cooperation with regards to the implementation of the provisions of the Services Chapter and adopting practical measures that would facilitate the greater participation of the FICs in services trade.