Trade Ministers Set Framework For PACER Talks

Take the pace out of PACER: Trade ministers to set the framework for Pacific negotiations.

Trade officials are assembling in Brisbane today to kick off negotiations on a new Pacific trade agreement. Ministers will follow later in the week. This is a crucial meeting which will test whether Australia and New Zealand are prepared to listen to the Pacific’s needs and aspirations, or whether they will push an inappropriate model of development on the Pacific.

Even before they have started, trade negotiations between the Pacific Island countries, and Australia and New Zealand, have been controversial. In August, two days before the Pacific Islands Forum, the heads of state of the 14 Pacific nations were adamant in saying that they were not ready to negotiate and that Fiji needed to be included. But by the time the Forum meeting had ended, they had done a complete about turn and agreed to start negotiations, and to exclude Fiji from full participation. There is no doubt that Australia and New Zealand can get their way in the Pacific, but at what price?

Barry Coates, Executive Director of Oxfam New Zealand, says, “The Pacific’s development future is on the table in these negotiations. A rigid free trade agreement could severely impact government revenue and jobs, and exacerbate the growing levels of poverty and ill-health. This is the time to challenge existing frameworks and explore alternatives which will allow a more flexible set of policies to enable the Pacific to grow new industries, add value to its resources and diversify its economies.”

Oxfam’s report ‘PACER Plus and its Alternatives’ suggests that taking a standard approach to trade negotiations could be hugely damaging for the region’s fragile economies. A key risk is the loss of government revenue from tariff reductions that could see Tonga losing 19 per cent of government income from a free trade agreement with Australia and New Zealand, Vanuatu 18 per cent, Kiribati 15 per cent, and Samoa 12 per cent. For many of these countries, the projected loss of government revenue is more than their total health or education budgets.

“What is needed,” says Coates, “is an economic co-operation agreement, with the Pacific’s development at its core. New Zealand and Australia have talked the talk on making this a development agreement, they now need to walk the walk. The first step should be a proper consultation period involving business and civil society. There needs to be objective research conducted into the types of trade and other economic policies that would benefit the Pacific. A rush to start negotiations without this preparation could cause irreparable damage to the Islands’ economies and their development prospects. There is a lot at stake for the people of the Pacific,” says Coates.

“A good start would be to remove the barriers that make it difficult for Pacific businesses to export. New Zealand enjoys a massive trade surplus with the Pacific – around 4:1. Surely we should act now to boost Pacific exports and build trust, rather than waiting to use changes to policies like rules of origin and biosecurity procedures as bargaining chips in the negotiations.”

“Pacific leaders are in the best position to know what type of agreement will suit their development priorities,” says Coates. “Australian and New Zealand ministers will need to come to the meeting with open ears and minds, prepared to put their promises into practice.”

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Editor’s notes:

1. The report 'PACER Plus and its Alternatives' is available on the Oxfam website:

http://www.oxfam.org.nz/resources/onlinereports/pacer%20plus%20and%20its%20alternatives.pdf

2. Trade Minister Tim Groser will join his Australian counterpart Simon Crean and 13 Pacific Island ministers for trade talks on Friday that are likely to set the timeline, content and tone of negotiations for a new agreement in the region (Fiji is excluded from the talks). New Zealand and Australia have said that the proposed agreement, dubbed the Pacific Agreement on Closer Economic Relations Plus (PACER Plus), is not simply about the two countries’ commercial interests, but will be a “new type of agreement”, aimed at promoting development in the islands.

3. The trade balance for 2008 between NZ and the Pacific Island countries was: NZ exports: $823m, imports: $210m (including $108m worth of crude oil from Papua New Guinea). Source: Statistics New Zealand

4. ‘Pacific Island countries’ refers to: Cook Islands, Federated States of Micronesia, Fiji, Kiribati, Nauru, Niue, Palau, Papua New Guinea, Republic of Marshall Islands, Samoa, Solomon Islands, Tonga, Tuvalu, Vanuatu.

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