By: L.N. Reklai

July 5, 2017 (Ngerulmud, Palau) Senate Joint Resolution 10-11 urging President Remengesau to establish Trade Agreement with People’s Republic of China (PRC) was struck down in a vote of 5-5 at Senate Special Session held on Wednesday, July 5, 2017.

Senators Hokkons Baules, Kerai Mariur, Aric Nakamura, John Skebong and Stevenson Kuartei voted for it while Senators Camsek Chin, Phillip Reklai, Uduch Senior, Rukebai Inabo and Regis Akitaya voted against it.


The resolution, introduced by Senate President Hokkons Baules in May 25, 2017, calls for a trade agreement with China to “facilitate the growth of the Republic of Palau’s economy”.

Some senators expressed concern initially about the resolution stating that they just received the report before the session and did not feel they were adequately prepared to act on it.

The Senate Standing Committee report consisted of a page and half report with tourism arrival statistics from 2011 to May 2017.  It also included statistics of all airlines servicing Palau from 2011 to date.

The report stated that each year government appropriate funds to pay debts of PNCC and PPUC and other public owned corporations and those debts are still substantial, thus increasing cost to consumers. The report added that the Republic must seek ways to expand the economy and the “Republic of China is an option due to its proximity and abundance of resources”.

The report recommended adoption of the resolution, adding that individuals and businesses from People’s Republic of China are active participants in Palau’s economic growth, based on number of land lease agreements, tourism accommodations, restaurants and tourists (87,058 based on 2015 PVA statistics).

According to the two public corporations, PNCC and PPUC, the national government does not pay their debts. Both entities service their own loans.   Although government had provided subsidies for low income households’ power and water bills.

National government does subsidize Palau Civil Service Pension Fund through appropriations and have passed as part of National Marine Sanctuary Act, a source of fund through visitor’s arrival fees.

Senator Reklai questioned whether this resolution was necessary.  “Over the last five years, we have seen many investments and businesses from the People’s Republic of China come to Palau and they have been here and even now, doing business here.”

Senator Aric Nakamura, Chairman of the Foreign Affairs Committee that reported resolution, stated that this was just another way to strengthen and enhance those relationships.

Senator Camsek Chin expressed his concern regarding the impact of such agreement on Palau’s long time ally Republic of China(Taiwan) and asked that this concern be taken into account in their deliberation.

Drop in visitor arrivals was emphasized as a reason to have trade relations with People’s Republic of China. Visitor arrival statistics from 2011 to 2016 were provided showing decline in number of tourists to Palau.  Senator Nakamura asserted that Palauans operators were suffering due to low visitor numbers.

Senator Mariur expressed that they should not be limiting the number of visitors from China, rather increase marketing efforts to other markets to create diversity.

Senator Reklai drew ire from Senate President Baules when he stated that the mass tourism is not the policy direction that Palau had decided on and that President Remengesau’s policy is for high value, low impact visitor, referring to a Responsible Tourism Framework Policy. He asked if the committee had taken this into account.

Senator Baules expressed that this is one option to help expand the economy.  “If this doesn’t work, we can look at oil and casino to help grow our economy,” argued Baules.

Half of the senators present voted to kill the resolution. Senators Mason Whipps, Frank Kyota and Mark Rudimch were off-island and did not vote.

Speculations were flying before and after the vote that this resolution is really a precursor for the casino proposal and that it is a suspect coming up right after Senate President Baules and Speaker Anastacio’s return from overseas trip to undisclosed destination.

Other senators insist it was merely way to help expand and grow Palau’s economy and to help Palauans livelihood.

It is expected that the resolution will be introduced again at the regular session in August. [/restrict]