Tuesday 20 Oct 2020 | 17:52 | SYDNEY
Tuesday 20 Oct 2020 | 17:52 | SYDNEY

Hot potatoes for Pacific trade policy

16 May 2011 10:00

Nic Maclellan works as a journalist and researcher in the Pacific islands.

For more than two decades, Australia has been promoting trade liberalisation and structural adjustment in the Pacific islands, including — in late 2009 — negotiations for the PACER-Plus trade agreement. But there are a number of issues complicating Australian trade policy in the islands region and progress on PACER-Plus is under challenge.

This Wednesday, Pacific Islands Forum trade ministers will gather in Vava'u in the Kingdom of Tonga — but there are a few hot potatoes that Australian officials are juggling in the lead up to the meeting:

Craig Emerson

Last month, Trade Minister Craig Emerson announced the Gillard Government's new trade policy: Trading our way to more jobs and prosperity.

Since Emerson replaced Simon Crean in the trade portfolio, there's been a renewed focus on multilateral trade liberalisation through the WTO Doha Round and the Trans-Pacific Partnership Agreement (TPPA). However launching the new policy, Emerson stressed that 'the Gillard Government will press ahead in negotiating high-quality, truly liberalising bilateral and regional trade agreements that do not detract from, but support, the multilateral system'.

A striking feature of the new policy is that PACER-Plus is not even mentioned, even though regional trade negotiations have been one of the pillars of Australia's engagement with the islands region since the late 1990s under the Howard, Rudd and Gillard governments. The absence of PACER-Plus from the list of bilateral processes suggests that our new trade minister doesn't see the regional deal as a 'high quality, truly liberalising process'.

This is hardly surprising, given that the central message from his predecessor Simon Crean and former Parliamentary Secretary for Development Assistance Bob McMullan was that PACER-Plus was not a standard free trade deal, but a 'unique' development agreement.

This has provoked questions about where PACER fits in the Government's agenda. This policy wobble is not helped by uncertainty about whether Emerson will make the long trip out to Vava'u this week, as he's committed to the APEC Trade Ministers meeting in Montana, USA on 23 May.

The Forum Island Countries' Chief Trade Advisor Dr Chris Noonan has previously stated: 'The pressure to negotiate a WTO-compatible agreement is coming from Australia and New Zealand rather than the Forum Island Countries. That's been the whole history of the PACER-Plus process'.

If Australia is less than enthusiastic, are there other practical initiatives on trade facilitation, labour mobility and measures to increase Pacific exports that don't require an overarching regional deal?

The Office of the Chief Trade Advisor (OCTA)

During ongoing negotiations for an Economic Partnership Agreement (EPA) with the European Union, the Forum Secretariat has been providing technical advice to the islands on a range of trade and economic issues. But the Forum has been criticised by Papua New Guinea over the handling of the EPA negotiations and the Secretariat can't play the same role for PACER-Plus, where all the parties are Forum members.

Since the appointment of New Zealand academic Chris Noonan in 2009 as the islands' trade advisor for PACER-Plus, there have been tensions between the Office of the Chief Trade Advisor (OCTA) and the Forum Secretariat (rather than operating from the Forum's Suva headquarters, OCTA is now an independent legal entity, housed in the Melanesian Spearhead Group secretariat in Port Vila). 

There has been a long-running debate over the resourcing and independence of OCTA. In 2009, Australia and New Zealand provided initial funding for OCTA, but that grant was due to run out in March this year. OCTA has rolled over the remaining funds beyond this deadline, but without renewed commitments from the two largest Forum members, the capacity of OCTA to support the islands is uncertain. As the establishment and funding of the trade advisor was a precondition to the commencement of PACER-Plus negotiations, any threat to OCTA's role will raise further questions about the negotiations.

Trade advocacy groups have called on the Australian Government to publicly commit to ongoing funding of the OCTA under existing arrangements. Will Canberra agree, or will it demand changes to OCTA's governance and constitution as part of the deal, a move that will cause anxiety among Forum Island Countries about OCTA's independence?


Any serious move to promote regional economic integration must take account of Fiji's geographic, demographic and economic role in the region. After PNG, Fiji is the second largest economy in the islands region and serves as a major transport, communications and services hub.

Since the Bainimarama regime was suspended from Forum meetings in 2009, Australian ministers and officials have tied themselves in knots, asserting that PACER-Plus is separate from the 2001 PACER agreement to which Fiji is a signatory. In his 2009 Ministerial Statement on PACER-Plus, Simon Crean noted: 'I recognise that the similar names-PACER and PACER Plus-have the potential to be confusing. But what is disingenuous in that confusion is the attempt by some to find a legal link between the two for the purposes of the Fiji issue.'

Today, the legal niceties have been drowned by a chorus of voices calling for changes in the Forum's engagement with Fiji. The ANZ Bank is calling for a new policy and business leaders, who will gather in Fiji in June to review PACER-Plus, have noted 'the exclusion of Fiji from the negotiating process so far has created confusion in the region about the relevance of a regional economic agreement negotiation without Fiji economic and business interests being fully represented.'

In 2010, Forum leaders agreed to ask the Forum-Fiji Ministerial Contact Group 'to consider possible modalities for engaging Fiji in PACER Plus negotiations', and report back before the next leaders meeting in September.

Last week, the Lowy Institute joined in the call for Fiji's inclusion in the PACER-Plus process. But will Canberra bite the bullet?

Photo by Flickr user Peter Hodge.