Vanuatu LDC graduation transition period will lapse by end of 2024, therefore the LDC smooth transition strategy and the trade policy framework recommended Vanuatu to secure its trade preference through bilateral trade agreements. An option is to secure the EU “everything but arms” scheme which Vanuatu is benefiting through its duty-free and quota free market access trade with EU, joining the bloc of Fiji, PNG, Solomon, Samoa, - Tonga and Timo Leste are on their acceding process.

Considering the expiry date of the transition period, on the 1 December 2022, the Prime Minister submitted his letter expressing Vanuatu intention to the EU Trade Commissioner in Brussels to accede to the iEPA in which the EU responded positively and accepted on The iEPA trade agreement signed between EU, Fiji, PNG, and now Solomon, and Samoa is based on trade in goods and in particular on fish export products. Already, the EU had communicated to include other sectors such as services and investment as more Pacific Island countries are showing their interest to accede to the agreement.

Following from PM letter, the department request the Forum Secretariat and MSG Secretariat through the Strengthening Pacific Intra-Regional and International Trade (SPIRIT) project a Cost- Benefit- Analysis (CBA) to support Vanuatu intention to trade with EU. This activity was carried out in January 2023 which is attached to this paper as a draft for comments by stakeholders. The report provides recommendations that should assist and guide Vanuatu on its negotiations with the EU. (Annex 2 CBA report). The negotiation process and modalities are yet to be developed by both parties in order to start the negotiation process. Note that the iEPA is a trade in goods agreement and that the negotiation will only focus on the market access offers for Vanuatu and not the legal text of the iEPA agreement that has already agreed by iEPA parties.