Responding to criticism of Australian policy in the Pacific Islands, Trade Minister Simon Crean and Bob McMullan, parliamentary secretary for Overseas Development Assistance explained in a recent Canberra Times op-ed that "Australia has embarked on a new era of cooperation with the Pacific, based on shared development aspirations."
They went on to state that the Rudd Government supports the "new, comprehensive, region-wide ‘trade-plus’ free trade and economic integration agreement, known as PACER Plus." Just in case there was any doubt, Crean and McMullan added that PACER Plus will "enable the countries of our own neighbourhood to share in the benefits of increased trade and economic growth."
No-one in the Pacific wants to seem ungrateful for a new Pacific approach, especially given fraught relationships with the previous conservative government, but one has to ask what exactly is so "new" about PACER Plus. PACER Plus is a product of John Howard’s unapologetic interventionism in the Pacific and his government’s attempts to reshape political and economic decision-making in the region towards regional integration, trade liberalisation and security cooperation.
The new agreement is envisaged by Australia as a free trade deal that will see Pacific Island Countries lower tariffs on Australian exports to the region. (Pacific nations already have duty free and quota free access to Australian markets.) Australia also wants Pacific governments to allow unfettered access to Pacific service "markets" for Australian companies, and to remove regulations on Australian investment in the region such that responsibilities to host nations will be reduced.
Other components of a comprehensive PACER Plus agreement may include new rules on intellectual property, government procurement and competition policy. Simon Crean claims that the 2008 Pacific Island Leaders Forum, held in Niue in August, left him with no doubt that "Pacific leaders share our aspiration for enhanced cooperation and integration within our region."
The political realities of plans for new FTA negotiations are more nuanced than that. During the Niue meeting, Pacific leaders met separately from Australia and New Zealand, and issued a press release which stressed the need for "careful preparations by Forum Island Countries (FICs), both individually and collectively, before consultations began with Australia and New Zealand" and for the early appointment of a Chief Trade Advisor to assist the FICs to realise their shared objectives.
Such caution about entering PACER Plus negotiations with Australia and NZ is not reflected in the outcomes document of the Niue meeting where Australia and NZ were present. This indicates the position of Australia and NZ as major donors in the region, and the importance that Pacific leaders place on maintaining good relations with Australia and NZ. It is not the Pacific way to confront such "friends" directly.
Governments in the Pacific are wary about a new FTA with Australia and NZ because they have a lot to lose. A recent AusAid commissioned report published by the Institute for International Trade at the University of Adelaide suggested PACER Plus would result in a 30 per cent increase in trade in the region. This report failed, however, to indicate that the vast majority of that increase will be in favour of Australian and NZ exporters.
Academics in the Pacific are predicting that 80 per cent of Pacific manufacturing could close down under PACER Plus, leading to unemployment for thousands of workers. A report commissioned by the Pacific Islands Forum Secretariat and released in November 2007, found that countries such as the Solomon Islands, Cook Islands, FSM, Niue and Nauru could lose between five to 10 per cent of their recurrent revenue and for about half the Pacific, including Samoa, Vanuatu, Tonga, Kiribati, RMI and Tuvalu full trade liberalisation would present a major fiscal challenge as the adjustments would be between 10 and 30 per cent of revenue.
Furthermore, most Pacific countries lack secure social nets, such as state welfare, to assist unemployed workers. At the same time, Pacific governments will face a double burden as revenues fall through tariff slashing, undermining the provision of public services in the region. This picture is a very different one to that painted by Simon Crean.
The promotion of PACER Plus as a development agreement has a rather familiar and hollow ring to many in the Pacific. The Economic Partnership Agreement (EPA) currently under negotiation with the European Union has also been pitched as development friendly. Unfortunately the content of the proposals put forward by the EU have shown this rhetoric to be largely empty.
Some argue that Australia is negotiating PACER Plus in order to secure the same access for Australian bureaucrats in the Department of Foreign Affairs and Trade to Pacific markets as may be granted to their European counterparts under any final EPA signed with the EU — lest Australian businesses complain that they are placed at a disadvantage.
However, Australia doesn’t have to approach trade relations with the Pacific from such a position of narrow self-interest. If the Rudd Government really wanted to offer a "new approach to development in the Pacific", it could acknowledge the special and different circumstance of the Pacific Island Countries (PICs), and offer the region real alternatives to the kind of reciprocal free trade agreement being pushed by the EU.
These alternatives could include improvements to the current South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA), with a focus on enabling Pacific Island Countries and their peoples to use their access to Australian and New Zealand markets to overcome poverty. Improvements in Rules of Origin requirements, removal of trade barriers (including Australia’s kava ban) and assistance with meeting necessary sanitary and phytosanitary rules in Australia and NZ are all initiatives that would expand Pacific export opportunities — without requiring a new FTA between Australia, NZ and the PICs.
The speed with which PACER Plus is being pushed does not suggest any new spirit of partnership on the part of the Australian Government. Australian resistance to the request from the Pacific to have in place, before negotiations begin, a new Chief Trade Advisor to help organise the region’s negotiating positions — critical, given the diversity of Pacific countries, and national-level capacity issues — is both unhelpful and unreasonable. After all, we are talking about negotiations between two very unequal partners.
The Australian Government has also refused to rule out linking a new seasonal workers scheme to PACER Plus negotiations, as recently discussed in newmatilda.com. Australia’s Parliamentary Secretary for Pacific Affairs Duncan Kerr has indicated that in return for the labour mobility scheme, the government will expect some commitment to Australia’s aims in the region. He told the Victoria University Symposium on Pacific Islands Migration and Labour Mobility last month that "labour mobility cannot be considered in isolation from other initiatives being taken bilaterally and through the Pacific Island Forum."
Australia should not use the workers scheme as a bargaining chip in the PACER Plus negotiations. Such a cynical move is opposed by many in the region, including the South Pacific and Oceanic Council of Trade Unions, and the Pacific Conference of Churches. A labour mobility scheme can be a mutually beneficial development arrangement as long as the Australian Government protects seasonal workers while they are in Australia — working with employers and unions to guarantee proper wages, conditions and housing.
This is an opportune time for the Australian Government to look at initiatives that will make a difference to the lives of nearly eight million people in its backyard.
The challenge for the Rudd Government is this: does it have the political will to address the development needs of the region — independently of its free trade aspirations? Now that would be a new approach to the development aspirations of the Pacific. Otherwise we are merely window-dressing the same old issues and approaches with new rhetoric.
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