One of the key features of the MSG is the Melanesian Spearhead Group Trade Agreement, a sub-regional preferential trade agreement established to foster and accelerate economic development through trade relations and provide a political framework for regular consultations and review on the status of the Agreement, with a view to ensuring that trade both in terms of exports and imports is undertaken in a genuine spirit of Melanesian Solidarity and is done on a most favoured nation (MFN) basis. Negotiations are held regularly between the members' leaders to consider the progress and developments of the agreement. After a revision in 2005, it covers 180 articles free of fiscal duty.
The MSG Trade Agreement was signed in 1993 by Papua New Guinea, Solomon Islands and Vanuatu. At the 6th Melanesian Spearhead Group (MSG) Trade and Economic Officials’ Meeting on 16 April 1997 in Honiara, the Fiji delegation indicated its willingness to accede to it. This initiative was endorsed at the 1997 MSG Leaders Summit. Fiji became a formal member of the MSG Trade Agreement on 14 April 1998. The 9th MSG Trade & Economic Officials meeting was held in Papua New Guinea on 29 and 30 November 2000. This meeting saw the acceptance of the expansion of the MSG Product Schedule tariff headings from four digit to six digits, thereby facilitating MSG trade by removing the ambiguity in product identification at Customs points of entry. The agreement is General Agreement on Tariffs and Trade (GATT) consistent and has been approved and accorded recognition by the World Trade Organization (WTO) Committee on Regional Arrangements to be compatible and meeting the requirements of Article 24 of the GATT/WTO Agreement.
More recently, the Melanesian Spearhead Group got heavily involved in the political discussions following Fiji's suspension from the Pacific Islands Forum in May 2009.