A SMOOTHER JOURNEY TOWARDS PACER PLUS

Professor Wadan Narsey





The Pacific Islands Forum Countries (FICs) (minus Fiji) recently agreed in Apia, to bring forward negotiations with Australia and New Zealand on PACER Plus. This was originally envisaged when PICTA was signed amongst the FICs themselves, that negotiations on implementing PACER would be triggered if the FICs entered into preferential trade agreements with any third party Developed Countries such as the European Union through the EPAs.
The decision to fast-track the negotiations has faced a barrage of criticisms from organisations such as PANG which has long been an opponent of PACER Plus. PANG argues that it was legally wrong to exclude Fiji simply because it had been suspended from the Pacific Islands Forum; economically, a PACER without Fiji makes little sense; that Australia and NZ were not giving the Office of the Chief Trade Adviser the independence and the resources to provide meaningful guidance to the FICs; and that Australia and NZ were not giving FICs sufficient time to prepare themselves.
Australia, NZ need
to heed criticisms
They also need to understand the many reasons why many of the FICs would be opposed to PACER Plus, if it were simply a free trade agreement between Australia, NZ and the FICs. While economists love to point out that their econometric models all show the massive benefits of a FTA for the PICs, critics like PANG and others point to very real costs which will be faced by FIC governments, industries and people:  large proportions of government revenues will be at risk; a high proportion of industries will face closure with losses of thousands of jobs; the people may face increased taxes on essentials; there may be a loss of discretionary national policy, foreign multinationals may become all-powerful in the FICs, indigenous land rights may come under threat, etc, etc.
Some of these expected costs are very real, and some are those that come part and parcel of the inevitable process of globalisation, which PANG has a strong ideological opposition to.
But one might also add another weakness which was clearly evident from the PICTA process: that the negotiations over PACER Plus will be a long drawn-out affair with trade officials, ministers, NGOs, etc, attending meetings after meetings, legal battles after legal battles, discussing consultancy reports after consultancy reports on the theoretical benefits and costs of a future FTA focussed on trade in goods. And as was the case with PICTA, ministers may even sign the eventual PACER Plus, but then totally oppose the operation of the agreement the moment costs begin to eventuate as they will, given that PACER Plus poses far more job losses in PICs than PICTA.
Is there an easier way?
For several years now, I have suggested that Australia and New Zealand need to facilitate PACER Plus by unilaterally conferring benefits to FICs that reassure them in the very areas that they fear PACER Plus:
(a) The crucial problem in FICs is finding formal sector employment for thousands of school leavers. Why have Australia and New Zealand not opened up their markets for unskilled labour from the FICs when their employers have long been calling for this? Not only would this release labour supply pressure in the islands, but also generate large remittance incomes which would prop up foreign exchange reserves and foster development throughout the FICs. Not that Australia and NZ have already sucked up billions of dollars of more than a hundred thousand professionals and skilled personnel from the FICs worth billions of dollars in human capital.
(b) With nearly all PIC budgets under long-term financial strain, there could be significant Australian and NZ investment in FIC infrastructure—roads, utilities, education, medical services. This would not only foster the pre-conditions for investment but also improve the standards of living for islanders and investors alike.
(c) Australia and NZ need to foster joint investment projects in WTO-compatible industries in FICs, focusing on tourism, timber, marine resources, service industries (like retirement homes and call-centre industries) to accelerate economic PIC growth, but ensuring that FICs feel in control of their economies, not ruthless and anonymous multinationals.
(d) Australia and NZ could encourage donor schemes whereby expert Australian and NZ citizens (including former FIC citizens) are able to be based in the FICs in the areas of urgent technical need, especially in the FIC depleted civil services.
(e) Australia and NZ face dwindling demand from their civilians for military positions.  Why have Australia and NZ not fostered a revolving deployment of PIC military personnel in the dwindling ANZ defense forces?  The PIC personnel would be taken off their strained PIC budgets; not only might these PIC attachments be invaluable for peace-keeping deployment internationally, but such returned personnel might also be improved in their professionalism and constitutional commitment to law and order- clearly an issue in several FICs.
(f) Australia and NZ both face dwindling demand from their civilians for naval positions while several FICs (such as Kiribati and Tuvalu) have excellent naval personnel. Why have Australia and NZ not fostered a revolving deployment of FIC naval personnel in the ANZ navies, extremely useful for policing the South Pacific oceanic borders, controlling over-fishing, whaling, monitoring under-sea minerals including oil and gas; and defending Fortress Pacific?
(g) Why have Australia and NZ failed to encourage the SANZAR nations to include a FIC Super 14 team in their competition playing home games in Fiji, Samoa and Tonga? This would not just boost their rugby but also their tourism industries. Similarly with rugby league, soccer, netball and other sports.
(h) And why have Australia and NZ not fostered the grand annual Pacific-wide arts festivals of music, dance, theatre that can showcase to the whole world what a phenomenally rich multicultural community we have in the Pacific?
Part of PACER Plus?
Should these benefits be formally made part of PACER Plus? This is a question  FICs should think about seriously. PANG, for instance, is vehemently opposed to doing that. It claimed that such benefits (such as access to seasonal labour) can be an informal aid arrangement. 
But an informal aid arrangement on guest workers can also be unilaterally terminated by the donor countries, for instance, if there is a slight increase in unemployment and union views become critical during an election period. 
It is vital for FICs that the very concrete benefits which can compensate them for the costs of PACER Plus are not left to the vagaries of donor country policies. Not only must FICs, but also the donor countries be locked into polices which are for the greater good of all the signatories. Donor countries also must not be allowed to backtrack.
What's ANZ vision of the PICs?
If Australia and NZ were to offer these advantages to the FICs, effectively, the FICs would come to be treated like any remote rural community in Australia or NZ, whose skilled human resources continue to flow out to Sydney or Auckland, but they remain civilized rural outposts. There would then be little need to convince Pacific Islands leaders that they should relinquish some of their discretionary powers over their economies.
But for that to happen, Australian and NZ political leaders need to have a long-term vision of Pacific Islanders as one with Australian and NZ citizens, in all aspects of human endeavour: economic, political and social .
Australia and NZ need to stop treating FICs as “foreign” countries with whom hard trade deals need to be pushed through by fair means or foul, with a paternalistic use of carrots and sticks.
For a start, Australia and NZ need to face the reality that the military Fiji Government and its trade officials must be allowed to fully participate in the PACER negotiations.
The military regime is in effective control of the economy and PACER Plus is far too  important for the region’s future, to be used as a stick to make a short-term political point.