Islands Business - Trade: PIPSO BACKS REGIONAL INTERGRATION

But must approach it as a collective force

Private sector talk...participants at the Pacific Business Forum.
Mention regional integration and unification in the Pacific and you are likely to get sceptics with sardonic smiles plastered on their faces.

Private sector talk... participants at the Pacific Business Forum.

For it is no secret that when politicians talk about it, the rest vilify it as possibly being “70% lipservice, 20% effort, eight percent imagined progress and two percent real progress”, as one opinion puts it.

Certainly there are talks of unification—the blueprint being the Pacific Plan—but governments in the region do maintain national policies that give out weak signals of any intention to fully integrate with other neighbouring nations.

Case in point: The experts will likely tell you that out of the 14 Forum Islands Countries (FICs), only five have so far ratified PICTA (Pacific Islands Countries Trade Agreement), formed five years ago.

It has the ambitious plan to seamlessly integrate FICs and has the potential to lead to a level of integration where goods, services and people move freely around the 14 FICs.

Visionaries foresee PICTA as a harbinger of a new Pacific, where issues and challenges faced today in the provision of essential supports like shipping and air services magically disappear.

But if that opinion of “two percent real progress” could be put to anything, it may likely refer not so much to the visions in trade agreements, but in the efforts being put into configuring them.

History is indeed showing that FICs are slow in trusting the ability of a Pacific union to safeguard their sovereignty, yet it has on the other hand, made available information that the idea of cooperation at some level is being sincerely explored.

In the last five years, governments and trade partners have spent thousands of dollars sending trade officials to discuss various trade agreements that collectively cater for islands countries in the region.

Notable forms now on the table include an Economic Partnership Agreement (EPA) with the European Union, PICTA as well as the PACER, a trade framework that will seek to promote closer economic partnerships among FICs, Australia and New Zealand.

The possibility that these undertakings will enhance regional integration as well as consolidate the position of the 14 Forum Islands Countries in the global market was broadly discussed at last month’s inaugural Pacific Islands Business Forum organised by the Pacific Islands Private Sector Organisation (PIPSO).

PIPSO is of the view that regional integration must occur—a feat only achievable if there is political will—and that Pacific Islands countries must approach and tackle the global trade paradox as a collective force rather than little individual nations trying to score morsels of benefits, which can only be a relatively costly exercise.

With such an integrated approach and upon the platform of an inclusive trade pact, FICs may have a better chance with their exports than they would have otherwise achieved on their own.

Attended by around 200 officials from government and private sectors across the Pacific, the two-day symposium was ultimately a rare opportunity for these two parties to come together in the same room, share information, discover and get to know the shape of the challenges that exist.

Over the years, governments in the Pacific have learnt the importance of consulting their private sector in order to produce workable and realistic designs of what to ask of their trade partners in bilateral or even multilateral trade agreements.

For indeed, while the freebies may look good on paper, there are other ways that the benefits can be eroded or made useless.

“It’s not so much the contradictions that are contained in the internal structure of the trade agreements, it’s the related barriers,” said Kaliopate Tavola, trade consultant for the Pacific Islands Forum Secretariat.

“Trade facilitation for instance, the existence of non-tariff barriers in the form of sanitary and phytosanitary measures, technical barriers of trade and customs procedures...those have been the brunt of criticisms—it’s too complex, the value added threshold is too high and difficult to implement...”

It is a known fact that market access victories in the past have amounted to little when applied on the ground and this has been blamed on the historically low level of government-private sector consultations.

From a practitioner’s view, Mark Halabe, owner of the Fiji-based Mark One Apparel, spoke of how the high hopes attached to SPARTECA (South Pacific Regional Trade and Economic Co-operation Agreement) when it was signed by governments in the region 30 years ago dwindled into a reality where the framework was “hardly utilised in the first six years. Many thought it was a white elephant while others never knew of its existence”.

This was despite the fact that SPARTECA, a non-reciprocal trade agreement, had allowed nearly open access of Forum Islands goods and services into Australia and New Zealand.

Halabe, a TCF exporter, opined that the lack of utilisation of SPARTECA by regional governments except Fiji, was largely related to the restrictive Rules of Origin and that FICs had to import most raw materials while competitor China had the edge in sourcing everything locally.

Along with the barriers identified by Halabe and Tavola, there are also political risks, such as decisions that trading partners do make which are eventually ruinous to the Pacific; a notable one being the banning of kava by Europe and Australia.

Pitted against such challenges in a ruthless and murky playground that globalisation is increasingly becoming, FICs are in for a tough time, their “two-percent real progress” being just the beginning of a journey that will see many changes in the region.

But fragmentation aside, FICs as a trading bloc, have much to offer to the world such as kava, noni, fish, tourism and labour. For FICs to work together to get the maximum benefits out of these, the key is for them to want to move forward, to progress and meet globalisation.

“To me, the one thing that makes a difference in the progress of a country is its leadership and the willingness of those in charge to see it and take the necessary steps to make it happen, or in other words—change,” said Hans Joachim Keil, Samoa’s associate trade minister and the Pacific’s lead negotiator with Europe.

He called on FICs to take a cue from Samoa’s economic and social transformation and urged for more public-private sector dialogue and by successfully cultivating a cadre of good leaders, FICs are then ready for change.

What would naturally follow would be the need for the country to change and upon reaching that point, FICs are likely to choose the path of a greater regional cooperation and integration.