Islands Business - Trade: PNG COULD BE THE WEAK LINK

Fears growing islands may end up with bad EPA

Samisoni Pareti

Trade talks... trade ministers with the Prime Minister of Vanuatu, Ham Lini (third from left).

Fears are growing that the Pacific may end up signing a bad economic partnership agreement (EPA) simply because of Papua New Guinea’s desire to protect its canned tuna industry.

The concerns were further heightened when the European Union released its draft text of an EPA it needs to conclude with the Pacific members of ACP by December 31.

Already Pacific trade officials and legal experts have expressed disappointment and deep concern about the text, arguing that it has reflected nothing about the key concerns of the region.

The draft EU text offered nothing on development, rules of origin, aid and investment, the officials said.

Even the most sought after provision of Mode Four—the temporary movement of skilled workers—would only be offered on a voluntary basis by EU member countries.

“Despite there being less than four months before the deadline for concluding the EPA negotiations, the EC’s draft text was only received by the region in early August and was still lacking in a number of critical details,” said a statement released by regional trade officials and legal experts who were meeting in Fiji late last month.

“The meeting recalled that the region had transmitted its own comprehensive proposal for a ‘pro-development’ EPA legal text to the EC over a year earlier.”

The Fiji meeting believed the EU text is “a slightly modified version” of a text that was drafted for West African members of ACP.

“The only major change was changing West Africa to Pacific,” an official at the Fiji meeting told ISLANDS BUSINESS.

“It’s if the EU had not been listening to us in the two years of discussions and negotiations we have been having,” the official said.

One of its most “offensive” clauses as far as the Pacific is concerned is the proposed Most Favoured Nation status. This means that Europe is demanding that any concessions granted by the region to Australia and New Zealand in PACER (Pacific Agreement on Closer Economic Relations) must be extended to EU members automatically.

Also disturbing is the implications of signing a bad EPA, and there are growing signs that the region might be forced to do just that.

Signing the EPA will trigger negotiations on PACER automatically, so a bad EPA will mean a bad PACER. And because of PNG’s desire to protect its tuna industry and the jobs of some 3000 people, the chances of PNG forcing the rest of the Pacific to sign the EPA is quite real.

As it is, the EU said that after December 31, ACP exports would be taxed like exports from all other nations. For PNG tuna, a 24% duty will be a sure killer as it won’t be able to withstand the competition from big canned tuna suppliers like Thailand and the Philippines.

Diplomats at the Fiji meeting pointed out that Pacific members of the ACP would not have been in this dilemma had PNG accepted the United Nations’ offer in 2006 that it be re-classified as an LDC (least developed country.)

Such a classification would see duty free entry of PNG tuna exports into Europe with or without an EPA, because exports of LDCs automatically qualify for tax-free entry under the Everything But Arms regime.

“The question the Pacific needs to ask is why should they suffer and sign a bad EPA simply because of the arrogance and egos of a few?” a diplomat who asked not to be named, told ISLANDS BUSINESS.