Revitalizing U.S.-Pacific Ties Through Kava Diplomacy

Revitalizing U.S.-Pacific Ties Through Kava Diplomacy

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These trade flows do not happen automatically. Entering a new market requires aligning with complex regulatory standards, establishing logistics systems, building relationships with distributors, and tailoring products to match local tastes. Overcoming these hurdles can take years. In the case of kava exports, regulatory challenges have been especially steep. Until recently, U.S. authorities did not recognize kava as a conventional food, which severely limited its ability to be sold in supermarkets or restaurants. The U.S. Food and Drug Administration (FDA) issued a notice clarifying this in December 2025, opening the pathway for further market expansion.

This policy change is a positive sign for engagement with Pacific Island countries, but far more work remains to rebuild lost economic ties. For one, if kava trade is to serve as a meaningful driver of broader economic development, its industry players will need to grow and scale production. This feat is challenging in an industry where most businesses are family-run operations, and it risks creating disruptive social and environmental impacts if not carefully managed. Second, regulatory trade barriers remain in place with many other potential kava importers, such as European and Asian markets. Even in the United States, receiving a regulatory greenlight is only the first step toward broader market access; kava sellers must find distribution networks, secure reliable consumer demand, and navigate the logistical complexities of the U.S. food system. Third, a kava-based economic development strategy is only relevant for kava-growing countries. Other channels of engagement will need to be identified for Pacific nations whose economic strengths lie elsewhere, and similar challenges of scaling and logistics will need to be overcome.

More broadly, the FDA's kava policy change and the years of advocacy leading up to it illustrate how regulatory minutiae can create major trade barriers for small exporters hoping to access the U.S. market. This is hardly a unique challenge to the Pacific Islands; similar complaints have been raised by small businesses in Africa and other developing economies hoping to deepen their engagement with the U.S. economy. If the Trump administration's "trade, not aid" slogan is to materialize into meaningful commercial ties with the developing world, more resources must be directed toward identifying and addressing these kinds of hurdles.

For a region as aid-dependent and climate-vulnerable as the Pacific Islands, commercial revenue alone will not be sufficient to meet its development needs. However, targeted growth in niche industries such as kava can help lay critical financial foundations by generating income, strengthening export capacity, and attracting investment. In doing so, these sectors can also spur improvements in economic infrastructure, such as ports, transportation networks, financial services, and regulatory capacity, that can help other industries grow.

Recommendations

U.S. policymakers have identified deeper engagement with the Pacific Islands as a strategic priority. Kava trade presents the United States with a case study on the type of opportunity available for the United States to reestablish itself as a meaningful commercial partner in the region while supporting Pacific Islanders' economic development goals. Policymakers can advance these strategic objectives through targeted policy support from the Millennium Challenge Corporation (MCC), the Development Finance Corporation (DFC), and other development assistance mechanisms.

MCC's unique focus on grant-based development support makes it an ideal mechanism for promoting kava-based commercial ties between the United States and the Pacific Islands, and policymakers have specifically highlighted its centrality to U.S. strategic engagement in the region. As a U.S. government-funded economic development agency, MCC structures its development promotion strategy around five-year partnership programs with eligible countries-known as "compacts"-and smaller-scale agreements known as "threshold programs." Countries that establish a compact or threshold program with MCC receive financial and technical support to unlock growth in key sectors. MCC programs commonly support agriculture financing, transportation infrastructure, climate-resilient infrastructure, farmer education initiatives, and technical support for land rights management-all mechanisms that would directly support the growth of kava businesses.

The timing is ideal for deeper MCC engagement with the burgeoning kava sector. In August 2025, MCC selected Fiji and Tonga as eligible to establish a compact and a threshold program, respectively. At the time of writing, these countries are likely working to design their engagement programs, presenting an obvious opportunity to capitalize on kava growth opportunities. In February 2026, MCC officials visited Vanuatu to assess the impacts of prior investment and potentially signal expanded interest in future programmatic support there. The Solomon Islands, meanwhile, is wrapping up a threshold program launched in 2022 and may become eligible for a compact in the future. Of the major kava-growing Pacific Island countries, only Samoa has not received recent attention from MCC-though it could make for an appealing investment destination in the future.

How can MCC programs in these regions support kava production? In Fiji, Tonga, and elsewhere, the kava industry is supply-constrained, meaning that structural factors are preventing kava growers from fully meeting growing demand. CSIS researchers spoke with Pacific Islanders to understand the most significant barriers they face to growing their businesses. The top four challenges, identified below, are strong candidates for MCC support.

1. Kava farmers lack access to credit and financing mechanisms. Most kava is grown in small, family-run businesses in rural communities, where access to financial institutions is limited. If a crop fails due to extreme weather or disease (both of which are increasingly common), farmers may face a cash flow shortfall that prevents them from replanting a crop for the next growing season. This is exacerbated by kava's long time to maturity-kava typically grows for three to five years before it can be harvested. By expanding access to agriculture financing, MCC can smooth risk and promote growth in the industry.
2. Droughts, cyclones, flooding, and other weather-related shocks pose a serious challenge to kava production. The destructive effects of extreme weather were illustrated vividly in 2021, when Cyclone Yasa destroyed more than 50 percent of Fiji's kava crops. These impacts are poised to worsen over time as climate change increases the frequency and severity of extreme weather events. Yet climate-resilient agriculture technologies can help mitigate these risks. Climate-resilient greenhouses are one specific way to shield plants early in their growing cycle, improving their survival rate once transplanted into a field. These and other technologies are key candidates for MCC investment.
3. Kava production is constrained by limited transportation infrastructure and high transportation costs. In Fiji and Vanuatu, for instance, kava production is concentrated in outer islands, after which it must be shipped to the capitals for export. Farmers in bothcountries cite that poor-quality roads and costly interisland shipping eat into their margins and discourage further scaling. MCC grants can ease these burdens by identifying cost-effective ways to improve infrastructure quality and reliability.
4. Kava exporters face barriers to accessing global markets. The FDA ruling cited above is a clear example of how aligning with regulatory standards can help unlock new markets, but these measures are challenging to navigate without external trade facilitation expertise, which MCC can support. Near-term goals include support for kava producers seeking Hazard Analysis and Critical Control Point (HACCP) certification, a food safety management system that identifies and controls risks throughout food supply chains. Recently, Ariana Kava Trading became the first Tongan company to receive this certification, allowing it to export kava to new commercial markets. Regulatory hurdles are not the only barrier to finding new markets overseas. Marketing and information campaigns also play a critical role in socializing a new product like kava and contextualizing its social and cultural significance. Yet farmers report a lack of resources in this area, leading to lost commercial opportunities. MCC programming can partner with kava exporters to help navigate both of these challenges.

These measures all position kava growers to scale their businesses and meet unmet demand. Economies of scale offer the commercial benefits of driving down unit costs and increasing marginal returns, as well as attracting the interest of larger distribution networks. In addition, larger business operations can position kava producers to pursue investments from other U.S. agencies, namely the DFC. Unlike the MCC's grant-based programming approach, the DFC supports economic development through debt- and equity-based financing. These tools are well-positioned to expand credit access to growing kava businesses.

Commercial-scale kava production offers several benefits for Pacific Island economies, but it also requires careful consideration of sustainability concerns. The Pacific Islands are home to fragile ecosystems, which are being strained by the threat of climate change. Policy incentives for kava production and exports must be paired with measures that protect the natural context in which kava is produced. These include crop rotation patterns, preservation of genetic diversity in cultivars, sustainable irrigation and fertilizing practices, and protection of undeveloped land. Preservation of kava's unique cultural context is also critical, and any efforts to promote growth in the kava industry must be led by traditional Pacific Island kava growers themselves.

As a final point, it is important to note that efforts to grow U.S.-Pacific Island commercial ties are undermined by the deployment of tariffs against Pacific Island imports. Most Pacific Island countries now face tariff rates of 10 or 15 percent on exports to the United States. This threatens the profitability of kava exporters and deters market entry due to perceptions of risk and unpredictability. Moreover, the United States gains little from these tariffs. Pacific Island exports to the United States are exceedingly small and do not compete with existing U.S. industries. U.S. policymakers should consider whether these minuscule fiscal benefits raised by tariffs on these goods justify the symbolic and reputation costs of keeping tariffs in place on would-be Pacific Island partners.

Conclusion

With the United States shifting its foreign policy from aid to trade, kava offers a practical example of how this approach can take root in the Pacific Islands. Kava's regional significance and global appeal make it a promising pathway to economic growth and stronger geopolitical ties. By leveraging institutions such as the MCC and DFC to support market access and private-sector growth, Washington can not only advance Pacific-led development goals but also reinforce its strategic presence in a region where economic partnerships increasingly define influence.

John Augé is the program manager for the Australia Chair at the Center for Strategic and International Studies (CSIS) in Washington, D.C.Hugh Grant-Chapman is a fellow with the Economics Program and Scholl Chair in International Business at CSIS.