The key event is a meeting of the region’s trade officials in Vanuatu. It needs to overcome the stand-off within the region that has blocked progress so far. In the last three meetings, Australian and New Zealand officials have failed to persuade their Pacific Island counterparts of the value of the agreement they are proposing.
A comprehensive trade and development agreement in the Pacific is vital, not least because secure access to Australian and New Zealand markets for the goods and services produced by the Pacific Islands is critical to their development prospects.
Australia and New Zealand have both been pushing this so-called ‘PACER Plus’ agreement at the highest level (PACER being the Pacific Agreement on Closer Economic Relations). Last month, Australia’s trade minister toured the region to promote PACER Plus. Last weekend, New Zealand’s trade minister hosted informal ministerial talks on it. But the talks merely underscored the seriousness of the current impasse, with ministers only managing to agree to ’move forward’ on PACER Plus.
In Vanuatu this week, officials face a massive task in trying to forge enough common ground to pave the way for formal trade negotiations. Here are three of the key things that must be on the table, if the agreement is to be of real benefit to the Pacific Islands.
The first is real market access. Tariff and quota-free access to Australian markets does not translate into real access for the Pacific Islands, when it takes years to establish whether their tropical fruits and vegetables can satisfy quarantine regulations. In the face of such lengthy, costly and uncertain quarantine procedures, entrepreneurs will not invest in agricultural export activities in the Pacific Islands.
Under PACER Plus, Australia needs to guarantee the swift processing of permit applications for Pacific Island agricultural exports, and to provide the resources Pacific Islands will require to substantiate their applications.
The second is fair rules of origin. These will determine whether an export counts as being made in the Pacific Islands, for the purpose of granting it preferential access to Australia. The small and undiversified economies of the Pacific Islands make it hard for their manufacturers to get enough of a production process occurring locally to confer local origin under standard rules.
Australia needs to be willing to consider innovative rules of origin, with measures and thresholds commensurate with economic realities in the Pacific Islands.
The third is the facilitation of trade. This should encompass support for the development of enterprises in the Pacific Islands that can take advantage of access to Australian markets, for example through the provision of expert advisers to local entrepreneurs to help them build supply chains or market their products.
Such assistance should be guaranteed. It is neither reasonable nor fair for Pacific Islands to bind themselves to liberalise trade, if Australia is not bound to provide the assistance they will need in order to benefit from trade liberalisation.
The challenge is to craft an agreement that is tailored to the unique circumstances of the small economies and bureaucracies of the Pacific Islands.In this situation, standard templates for free trade agreements will be of little use.
Virginia Horscroft has worked extensively on trade and development issues in the Pacific Islands for both government and regional organisations, and has a doctorate in development studies from the University of Oxford.