Bhagwati also pointed to the fact that most countries, but most of all poor countries, have only a limited supply of the skills needed to understand, negotiate, and implement trade agreements. Therefore, the proliferation of so-called regional trade agreements means that scarce skilled resources are distracted from the primary task of ensuring that best use is made of membership of the WTO.

PNG is a member of the WTO; but it is also a member of the Melanesian Spearhead Group (MSG), the Australia-PNG Trade Agreement, and APEC, among others, and has recently been negotiating the Economic Partnership Agreement with the EU and signed an Interim Partnership Agreement with the EU because of the failure to conclude those negotiations. And the negotiations over Pacific Agreement on Closer Economic Relations (PACER) with Australia and New Zealand are forthcoming. PNG and Fiji, let alone the smaller Pacific island countries, have few people with high-level trade theory and policy skills and little in the way of trade negotiating skills.

It is good to see that Australia is assisting the Pacific island countries to improve their understanding of trade policy and to improve their trade negotiating skills in preparation for the upcoming negotiations of PACER. I was also pleased to see the emphasis that Trade Minister Simon Crean (in the biennial Sir Arthur Tange Lecture In Australian Diplomacy) gave to trade facilitation as part of the agreement to come from the PACER negotiations. As small and isolated countries, the Pacific island countries need to reduce their costs of trading on international markets as much as possible.

Papua New Guineans worry about being ‘flooded’ with imports as the result of lowering trade barriers and being inundated with workers as the result of any Mode IV agreement. But there has not been a ‘flood’ of imports as a result of the Trade Reform Program already undertaken. As far as expatriate workers are concerned, skilled workers should be welcomed as they are complementary to the employment of local labour. With respect to the employment of unskilled overseas workers, the pressure to raise the minimum wage back to the previous level should be resisted; as such wage increases would not be based on productivity increases—as there has hardly been any—and would only lead to further interest in bringing in unskilled overseas labour.

So my recommendations on trade policy are the following. Keep opening up the economy, particularly in services—such as has been done to some extent in transport and telecommunications services. Give much less attention to preferential trade agreements with other less-developed countries, such as PICTA and the MSG, and focus more on deep integration with larger, developed countries—starting with PACER. And keep working on the other remaining internal constraints.