Pacific Agreement on Closer Economic Relations ‘Plus’ (PACER-Plus) is re-writing the rules and conditions on how Australia and New Zealand investors and corporations invest in Pacific Island Countries (PICs) and how those countries are able to ensure that i t meets their needs.
There are big dollars involved in investments and services trade between the Pacific and Australia and New Zealand. In 2016, New Zealand sold NZD$278 million of services to PACER-Plus countries (excluding Australia) and describes the new commitments made by the Pacific Island Countries in Services as “commercially significant” and importantly protected against any future deals the Pacific signs with other nations.
It’s important to remember that agreements like PACER-Plus, especially as they relate to investment, are highly controversial and a growing number of countries, including Brazil, India and South Africa are withdrawing from them and developing substitutes that balance commercial interests with regulatory sovereignty and social rights.
The movement of goods across the Pacific under the Pacific Agreement on Closer Economic Relations ‘Plus’ (PACER-Plus) will now be governed by a number of rules that are in favour of Australian and New Zealand exporters. I t will impact the policies Pacific Island Countries (PICs) will be able to use to encourage the purchasing of local goods or nurturing infant industries. The mandated removal of import taxes will also jeopardize the ability of PIC governments to raise revenue for essential services and infrastructure.
The concerns held by Pacific communities and some Pacific island governments about the regional free trade agreement known as PACER-Plus are well founded according to new analysis released today by the Pacific Network on Globalisation (PANG).
The release of the comprehensive analysis and accompanying briefs examines the impacts of PACER-Plus in relation to the Trade in Goods as well as the Services and Investment components of the agreement.
“Over the years we have seen many experts detail the problematic nature of PACER-Plus and how it was being constructed to Australia and New Zealand’s benefit. These warnings, including from an Australian Parliamentary inquiry have been ignored and now we have a binding agreement that won’t address the real economic issues the Pacific Islands have and instead will burden them further with cuts in government revenue and the reduced ability to regulate,” continued Mr Wolfenden.
The analysis states that the Trade in Goods chapter requires Pacific Island Countries to make extensive cuts in their import taxes with Solomon Islands, Samoa, and Vanuatu expected to lose USD$13million, USD$12.5million and USD$7.5million respectively. In addition to this the safeguard mechanisms and infant industry provisions are too weak to be of any practical use to Pacific Island Countries who need to protect their industries that are being hurt by increased imports under PACER-Plus.
“PACER-Plus does little to help boost the exports of Pacific Island Countries yet it is burdening them with a whole raft of legally binding commitments with meaningless safeguards. This is not development by any definition,” stated Mr Wolfenden.
The Trade in Services and Investment chapters represent a serious restriction on the ability of Pacific Island Countries to regulate and ensure that investment that comes in has its benefits maximised.
“Under PACER-Plus, Pacific Island governments will have a reduced ability to regulate their service industries and investments. Instead the investors will be given greater rights to challenge any policies or regulations that they deem to be unfair. PICs are signing up to a framework that many nations are walking away from in favour of something that better balances the rights of governments and investors,” added Mr Wolfenden.
PACER-Plus was signed by Australia, New Zealand, and 9 Pacific Island Countries in 2017. Fiji, Papua New Guinea, Palau, Republic of Marshall Islands and the Federated States of Micronesia all have not signed on. Access to Australia’s recently launched Pacific Labour Scheme is linked to progress on PACER-Plus.
“PACER-Plus has always been about the interests of the Canberra and Wellington, Australia’s cynical move in tying the labour scheme to their market access into Pacific economies is yet further proof. There are very real and serious implications of this agreement that countries need to factor in to their ratification processes before making any final decision,” concluded Mr Wolfenden.
The chapters on services and investment in the Pacific Agreement on Closer Economic Relations ‘Plus’ (PACER-Plus) show Australia and New Zealand (NZ) have dominated the negotiations to advance their commercial and strategic self-interest, just as they drove the original PACER signed in 2001. Commitments that development would be at the core of PACER-Plus for island countries have never materialised.
For services and investment trade, the Pacific Islands are not an insignificant market for Australia and New Zealand. This must be remembered when assessing the intent behind the outcomes of these chapters and in whose interest they really are.
In 2016 New Zealand sold NZD$278million of services to PACER-Plus countries (excluding Australia) and describes the new commitments made by the Forum Island Countries in Services as “commercially significant” and importantly protected against any future deals the Pacific signs with other nations.
The focus in this paper is on the implications for Forum Islands Country (FIC) governments’ ability to regulate in the national interest.
The analyses of the final Trade in Goods Chapter of the Pacific Agreement on Closer Economic Relations ‘Plus’ (PACER-Plus) and shows some of the negative implications for the Forum Island Countries (FICs) that have signed onto the agreement. Liberalisation of goods and other commitments in the area of goods have major implications on the development prospects of Forum Island Countries.
The conclusion of the analysis is that the Trade in Goods Chapter will severely hamper the development prospects of FICs. They restrict the FICs from being able to ensure that their economy meets the needs of its people and their economic aspirations. FICs are being asked to take on more erroneous obligations than they have done at the World Trade Organisation (WTO), without access to adequate safeguards and protective measures provided in other trade arrangements.
For those FICs not yet WTO members, the PACER-Plus and its Trade in Goods Chapter are effectively WTO accession ‘through the backdoor’.
Based on this analysis, PANG has serious concerns about the Trade in Goods chapter and feels that it is undermining the ability of the FICs to determine the policy needs of their domestic industries and producers.
The ongoing negotiations on fisheries subsidies at the World Trade Organization (WTO) risk overriding one of the key benefits from a trade deal with the European Union, claims the Pacific Network on Globalisation (PANG).
Speaking this week at the annual World Trade Organization Public Forum, PANG told delegates that the negotiations on fisheries subsidies can place additional requirements on tinned fish exports from PNG and any other country that signs up to an interim Economic Partnership Agreement (iEPAs) with the EU.
“The language being proposed by the European Union as well as other countries like New Zealand will make any new WTO rules apply to fish that lands in Pacific Island member states. This will undermine the hard negotiated win on global sourcing and make it even harder for Pacific Island Countries such as PNG to benefit from their most valuable natural resources,” comment PANG’s Trade Justice Campaigner, Mr Adam Wolfenden.
In the interim Economic Partnership Agreement (iEPAs) a global sourcing clause applies to canned tuna, allowing Papua New Guinea to source fish from any country, process it domestically and then export to Europe with no import taxes applied to it.
“The 2019 deadline is approaching and any Pacific WTO-Member like Fiji, Solomon Islands and Samoa that are looking to export fish to the European Union will need to examine these negotiations carefully to ensure that there is no winding back of benefits,” added Mr Wolfenden
The WTO negotiations on fisheries subsidies are borne out of Sustainable Development Goal 14.6 and aim to eliminate harmful subsidies that contribute to Illegal, Unreported and Unregulated fishing as well as overfishing and over-capacity whilst also recognising the special and differential needs of developing countries.
“The WTO has a mandate to deal with the issue of subsidies and it must stick to that. It cannot be acceptable to have countries like the EU and New Zealand bringing conservation and management measures into these negotiations. These are sovereign matters for the Pacific and they will continue to manage their resources”, continued Mr Wolfenden.
PANG will be joined on the panel by Dr Radika Kumar from University of the South Pacific as well as experts from the South Centre and the Centre for WTO Studies.
“We are seeing the continuation of trade talks being used by big fishing nations to undermine the control the Pacific has over its fisheries and limit the benefits that can be derived from them for Pacific peoples. If the talks continue on their current path the outcome will be neither about sustainability or development,” conclude Mr Wolfenden.