The gulf continues to widen

Dr Satish Chand



The gulf between reality and the rhetoric of regionalism within the membership of the Pacific Island Forum (PIF) continues to widen.
  And some of the recent rhetoric on Pacific Agreement on Closer Economic Relations (PACER-Plus) may hinder, rather than help progress towards deepened trading and economic linkages amongst the 16 members of PIF.
  In his inaugural address last August, Kevin Rudd, the Prime Minister of Australia and current chairman of PIF, referred to PIF as a family of nations. He announced a revamped PACER that included the provision of technical assistance (justifying the ‘Plus’ suffix).
  The aim of this assistance was to improve member states’ negotiation capacities. Equipping small nations with technically-trained trade negotiators is not a recipe for accelerated regional integration, however.
  One senior trade negotiator recently informed me that, even after receiving the expensive trainings, he and his colleagues are usually no better off and most discussions still result in gridlock.
  The negotiations (perhaps better termed haggling) last for days. And often times they end up in the lowering of bound tariff-rates on a handful of goods whilst leaving the applied rates untouched. This is at best very expensive shadow boxing.
Progress on PACER-plus
  According to the official website of the Australian government, PIF Trade Ministers are to meet to audit progress in relation to:
  • the establishment of the Office of the Chief Trade Adviser;
  • national consultations; and (you guessed it); and
  • more meetings.
  Other issues to be discussed include: Rules of origin, regional labour mobility, development assistance, and trade facilitation. Do not worry if these make little sense to you. The ministers agreed last October that, “During this preliminary stage, it would be premature to table any draft consolidated legal text.” 
  In sum, the last meeting spawned more meetings, but little else. Being a party to PACER-Plus is banded around as a substantial carrot for the participants. 
  At their Cairns meeting, PIF Leaders decided that PACER-Plus negotiations will initially involve all members except Fiji. Fiji would only be welcomed to the negotiating table once “the military regime takes credible steps to return the country to democracy and the rule of law”. This decision may actually help Fiji conserve resources by being left out of some expensive meetings that result in very little action.
  PACER-Plus is promised to: “Create jobs, enhance private sector growth, raise standards of living, and boost long-term economic growth.” 
  It sounds too good to be true, and in all likelihood is! This is not just cheap talk, but rather one with a hefty price tag. 
  The belief in a collective shift by the entire membership of PIF to free up economic exchange within the region is misplaced.
  Deepening of trade links like many other things in life proceeds in small steps. The move is in the right direction and between a small number of parties that over time balloons in size and depth. That is, the dynamics of regional integration are more akin to snowballing than to a massive-bang with everyone simultaneously breaking out in a hula.
A practical route to regionalism
  A more pragmatic approach to regionalism within the PIF would be for Australia and New Zealand to invite members of their family of nations to join the Closer Economic Relations (CER) agreement. 
  The CER enables the two cross-Tasman neighbours a free flow of goods, services, and labour with very few exceptions. It is the cleanest free trade agreement around.  And the economic arguments for its extension to PIF nations are indeed compelling. 
  A practical means to progressing regional integration championed by PM Rudd would be for him (and PM John Key) to progressively open up access to goods, services and workers from the Pacific Islands into Australia and New Zealand. This could be done on an opt-in/opt-out basis. That is, PIF members could choose to participate as and when they see fit. 
  Such an approach is likely to be the least threatening to all parties and devoid of the need for multiple meetings and conductors to get the PIF-choir in tune.
  And a unilateral move by any member towards free trade would be consistent with PACER, so no complaints from that end either. Who knows, Fiji could opt-in for this route!