23 Jul 2013

Pacific Trade Ministers meeting progresses trade deal

4:15 pm on 23 July 2013

Pacific Trade Ministers met last Friday in Samoa where debate focused on the proposed PACER Plus deal, which the organiser, the Pacific Islands Forum, says is a significant long-term opportunity to grow economies.

It says PACER Plus will help create jobs, enhance private sector growth and so lift living standards.

The Chief Trade Advisor, Dr Edwini Kessie, who provides support for the island countries in their negotiations with the metropolitan states, Australia and New Zealand, says they made some progress on the deal.

EDWINI KESSIE: I think we have made substantive progress in the last 12 months. We have managed to reach agreement on customs procedures, which basically deals with trade facilitation. We have also made substantive progress on quarantine issues. So we are making good progress. We'll be meeting again in Port Vila in the week of 12 August and we hope to make further progress on some of the outstanding issues. So I think, overall, we are making slow, but steady, progress.

DON WISEMAN: These things you list, they're the ancillary things, aren't they? They're not the core issues.

EK: No, I think they are core issues. Customs and procedures is a core issue. Rules of origin is also a core issue. But I don't know, I think what you may mean would be labour mobility and development assistance. These are two issues of great importance to the Forum Island Countries, and here I think we have made some progress in clarifying the positions of the parties. The most notable outcome of the meetings we had last week was the decision to commence negotiations on trade and services, as well as investment. And these two sectors are sectors of great importance to the Forum Island Countries. A lot of Forum Island Countries, given the size of their economies and the structure of their economies, they believe that they can get more benefits from an agreement on trading services and investment. So, as I said, we are now beginning, we haven't yet begun the negotiations in these two areas, but definitely these two areas hold great promise for the Forum Island Countries and obviously labour mobility and development assistance are also priority issues for the Forum Island Countries.

DW: All right. If we look at trade and services for, say, a small country in the Pacific - Tuvalu, Niue, places like this - how would they benefit?

EK: Well, with the trade and services agreement, the core benefit is that if countries give commitments it would send a positive signal to foreign investors to make investments in those countries. So the benefit of having an agreement on trade and services would be to try to attract foreign direct investment into certain critical sectors of the economy. If they open up, there will be increased competition, and that would lead to greater efficiencies in the service industry. So for the countries that you mentioned, for example, air transport is something of very great important to them.Tourism is also of great importance. But they are badly served in terms of connectivity. So having an agreement on trade and services can promote tourism in these countries. But for now the tourist arrivals in both countries are very, very limited, very small numbers. But you have an agreement on trade and services, and if they are better served then obviously that it is an area where they can expect to reap benefits from their agreement.

DW: I guess, to a certain extent, the elephant in the room is perhaps what PNG may or may not do since we've had the trade minister, Mr Maru, saying that they don't want anything to do with PACER Plus, that if PNG wasn't going to benefit, they're not interested. Was their discussion on this?

EK: There wasn't a discussion on that, but my understanding from Minister Maru is that he, basically, wants a fair deal for the Pacific Island countries. It's not my understanding that he doesn't want to have anything to do with PACER Plus.

DW: He was very clear ot us in saying that.

EK: Well, I had a chat with him and that was the impression that I got, that what he wants is a deal which would help the Forum Island Countries, because the idea being with PACER Plus it is not going to be a conventional free trade agreement, and PACER Plus should help the Forum Island Countries. So that is the way he's looking at it. So his view is that if we can get an agreement which would help the Pacific Island countries then he would be satisfied with it. But if it is an agreement which would not, directly or indirectly, assist the Forum Island Countries then he thinks such an agreement would not benefit the Forum Island Countries. So it is a little bit nuanced, but my understanding is that PNG would still engage, but what they want is a fair agreement or an agreement which will level the playing field and give them opportunities to increase their exports to Australia and New Zealand.

DW: Well, thank you for that. It's been under discussion now for quite some number of years. How much longer do you think before there will be a firm agreement on PACER Plus?

EK: A couple of ministers made a point that the longer it takes to conclude the PACER Plus, the benefits which would accrue to the parties would be diluted. So there is a sense of urgency for us to move as rapidly as possible. At last year's meeting in RMI the ministers instructed officials to progress rapidly. And as I said, just last week, the ministers gave us the mandate to negotiate in trading goods and trading services. So we are making progress. And I think, all things being equal, we should see the broad outlines of an agreement in two years, or maybe two years I think. We are making steady progress and I think with that momentum, if all the parties engage, then we should be able to have the broad outlines of a comprehensive agreement in about two years.