What is the GSP?

The Standard GSP targets developing countries that are classified by the World Bank as lower or lower-middle income countries and which do not have equal preferential access to the EU market through any other arrangement. Standard GSP beneficiary countries can benefit from duty suspension for non-sensitive products as well as duty reductions for sensitive products across approximately 66% of all EU tariff lines.

group

106.02 thousands

Population

account_balance

Constitutional Monarchy

Government

trending_up

-2.70%

GDP Growth

equalizer

5.80%

Inflation

money

$ 469,23 M

GDP

Facts about Tonga's economy

Island Economy

Tonga is an archipelago which consist of in total of 170 islands. This makes the integration into world markets particularly challenging and leaves the country vulnerable to weather conditions and natural disasters. Climate change resilience will be of key importance for the future development of the economy.

Export Products

Tonga's most important export products are pumpkins and other vegetables (e.g. yams, taro, manioc), fish, corals, and similar materials as well as antiques.

Trade Partners

Tonga's most important trading partners are New Zealand and Singapore, which together account for about 40% of total trade.

Economic Structure

The agricultural sector contributes about one fourth to the country's GSP ( 30%) and important crops include squash, coconuts, bananas, and vanilla beans. Livestock, fishing as well as the production of timber also contribute to the generation of revenues. The manufacturing sector, mainly driven by concrete, transportation, furniture, and crop processing, contributes another 20%. Remittances from Tongans living abroad add up to about 40% of Tonga's GDP.

Usage of EBA Preferences

While about 85% of EU imports from Tonga are eligible for GSP preferences, the country did not take advantage of GSP preferences in 2020. Tonga graduated from the EU's Standard GSP on 01 January 2021. With a per-capita income of $4.930 (2021), the World Bank classifies Tonga as an upper-middle-income economy.

Trade with the EU

Total trade with the EU amounted to € 6 million in 2022. With a share of 0.2%, the EU only plays a minor role in Tonga's trade relations.

Tonga and the EU (2022)

Imports from Tonga by product section

Imports from Tonga over time (in € m)

TONGA AND THE EU’s GSP

Economic Impact

85%

The large majority of Tonga's exports to the European market is eligible for GSP preferences.

0%

Tonga currently does not make use of GSP preferences.

Preference utilisation and export diversification

Tonga's imports to the EU

Preference Utilisation vs. total eligible imports

Tonga’s preference utilisation rate shows considerable fluctuations, ranging from 5% to over 70%. This is also reflected in the level of individual product sections. While exports for fish and crustaceans make good use of preferences, only 4% of eligible machinery exports use preferential access to the EU market.

The largest product sections under the GSP

EU imports from Tonga remain highly concentrated on fish and crustaceans and machinery imports. Both total, as well as preferential imports, increased substantially between 2016 and 2018. While the overall level of diversification remains low, Tonga experienced an increase in the number of tariff lines traded under the GSP in the last decade.

SUSTAINABLE DEVELOPMENT

As a beneficiary of the Standard GSP, Tonga is not obligated to ratify any conventions to be able to benefit from preferential access to the European market. Tonga has ratified 3 international UN conventions on human rights but none of the fundamental ILO conventions which protect labour standards. Tonga shows a strong commitment regarding environmental protection and good governance and has ratified in total 12 conventions related to these issue areas.

Core international conventions on human rights and labour standards

Ratified

Convention on the Prevention and Punishment of the Crime of Genocide (1948)
International Convention on the Elimination of All Forms of Racial Discrimination (1969)
Convention on the Rights of the Child (1990)

Not Ratified

International Covenant on Civil and Political Rights (1976)
International Covenant on Economic Social and Cultural Rights (1976)
Convention on the Elimination of All Forms of Discrimination Against Women (1981)
Convention Against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment (1987)
Convention concerning Forced or Compulsory Labour, No 29 (1930)
Convention concerning Freedom of Association and Protection of the Right to Organise, No 87 (1948)
Convention concerning the Application of the Principles of the Right to Organise and to Bargain Collectively, No 98 (1949)
Convention concerning Equal Remuneration of Men and Women Workers for Work of Equal Value, No 100 (1951)
Convention concerning the Abolition of Forced Labour, No 105 (1957)
Convention concerning Discrimination in Respect of Employment and Occupation, No 111 (1958)
Convention concerning Minimum Age for Admission to Employment, No 138 (1973)
Convention concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labour, No 182 (1999)

Additional Conventions

Convention on International Trade in Endangered Species of Wild Fauna and Flora (1973)
Montreal Protocol on Substances that Deplete the Ozone Layer (1987)
Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal (1989)
Convention on Biological Diversity (1992)
The United Nations Framework Convention on Climate Change (1992)
Cartagena Protocol on Biosafety (2000)
Stockholm Convention on persistent Organic Pollutants (2001)
Kyoto Protocol to the United Nations Framework Convention on Climate Change (1998)
United Nations Single Convention on Narcotic Drugs (1961)
United Nations Convention on Psychotropic Substances (1971)
United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances (1988)
United Nations Convention against Corruption (2004)

EU-Tonga Bilateral Development Assistance

DG INTPA

Access all info about EU-Pacific Islands Countries relations on the International Partnerships website: https://international-partnerships.ec.europa.eu/countries/pacific-islands-countries_en

Tonga