Make Trade Fair in the Pacific

By   /   June 22, 2017  /   8 Comments

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We gain privileged access to Pacific markets, but they gain no new access to our markets. There are no obligations on Australia to stop their protectionist policies towards Pacific kava exports and other fruit and vegetables that are produced in Australia. New Zealand exporters will gain $20 million in reduced tariffs, but this is lost revenue for Pacific governments that are already struggling to provide basic health care and education to their people.

There was a pile of 5000 petitions to “Make Pacific Trade Fair in the Pacific” in front of former Tim Groser in 2011 at a public panel on trade. Groser responded by saying that the standard Free Trade Agreements were not suitable for the Pacific. He said they were designed for the emerging economies and OECD countries, and were not for the smaller and vulnerable countries of the Pacific. I was Executive Director of Oxfam in those days and Oxfam’s paper PACER Plus and its Alternatives outlined what an agreement in the interests of the Pacific could look like.

Fast forward to last week in Tonga. New Zealand and Australia signed the PACER Plus agreement with 11 Pacific nations, after 16 years of negotiations. It is a standard Free Trade Agreement. It has failed to deliver on all the pro-Pacific rhetoric and the PR spin of government Ministers. The absence of three of the four largest Pacific nations (Papua New Guinea, Fiji and Vanuatu) at the signing spoke volumes about the unbalanced nature of the deal and the lack of benefits for the Pacific.

PACER Plus covers 11 Pacific island countries that account for only 14% of the Pacific island population. The insistence on a ‘Most Favoured Nations’ clause by Australia and New Zealand has driven a further wedge between the Polynesian nations who signed and most of the Melanesian nations who did not sign. PACER Plus will undermine investments over many decades in Pacific regionalism, as well as the Pacific’s own trade agreement.

New Zealand and Australia are far larger than most Pacific nations and far richer. As ‘Big Brothers’ we should be aware of the potential to use aid and political influence to get our own way with Pacific island nations. We should act responsibly, rather than pushing our own interests. A viable and peaceful Pacific is in our interests as well as theirs, with benefits ranging from regional stability and policing of organised crime through to the unique contributions that the Pacific’s people and its unique cultures add to our society.

We have not acted in the Pacific’s interests in PACER Plus. We gain privileged access to Pacific markets, but they gain no new access to our markets. There are no obligations on Australia to stop their protectionist policies towards Pacific kava exports and other fruit and vegetables that are produced in Australia. New Zealand exporters will gain $20 million in reduced tariffs, but this is lost revenue for Pacific governments that are already struggling to provide basic health care and education to their people. For example, Tonga spends $270 per person annually on health care compared with New Zealand’s spend of $4,016.

The Pacific wanted assurances that there would be continued opportunities for seasonal workers, but there are no future commitments. They wanted aid to help with building their economies, but all they have is a shuffling of the same amount of aid from one pocket to another – social priorities like health care, education and social needs will need to be cut to pay for the costs of implementing PACER Plus and providing technical assistance with trade (usually undertaken by foreign consultants). There are few benefits for the Pacific from PACER Plus.

Instead, the Pacific will bear restrictions and costs. For example, the rules in PACER Plus will limit the right of the Pacific to protect their people’s health. In the past, Pacific countries have not been allowed to restrict imports of unhealthy food, such as fatty meat which is implicated in obesity and the highest rates of diabetes in the world. An analysis of the potential impacts on food, health and government policies has been undertaken by a network of Pacific civil society groups. Women are often further marginalised particular where they have insecure incomes in the informal and semi-subsistence economy.

The costs of administration and compliance with treaties like PACER Plus are high for small countries, some of them with 10,000 people or less. In addition, PACER Plus will limit what their governments can do in future to build viable economies. Pacific governments would not be able to favour local enterprises over foreign companies, and support local sectors for the future.

The Pacific’s economies are small, dynamic and changing rapidly. They will need flexibility to regulate tourism, promote small business, support their rural and remote island communities, and respond to climate change and increasingly intense cyclones, sea level rise and extreme weather.

We have no idea what government policies will be needed by the Pacific in 10 or 20 years’ time. Pacific nations face an uncertain and challenging future, at least partly because of the inaction by Australia and New Zealand on reducing climate emissions. They face questions about their survival as small island nations threatened by sea level rise. It is unfair to lock future Pacific governments into a restrictive free trade framework that denies them the option to respond to future challenges and to develop their own path.

This model of ‘free market’ development wasn’t used by today’s emerging and rich nations when they developed, but is still being promoted for poor and vulnerable countries in trade agreements. There is mounting evidence that these Free Trade Agreements lead to profits for foreign companies and wealth for local elites, but undermine local food producers and provide few, if any benefits for the people who work in the informal economy or live a semi-subsistence lifestyle. Even former cheerleaders for free trade now recognise that Free Trade Agreements have exacerbated inequalities and undermined rights for workers, indigenous peoples and the vulnerable.

Australia and New Zealand have been pushing for PACER Plus to be signed. The 11 Pacific governments that agreed to sign are democratic governments that have chosen to do so, but the complex 806 page PACER Plus agreement was published only two months ago, and there has not been time for detailed assessment and public debate of its impacts.  

The Pacific nations are already open to trade – they are some of the most trade-dependent countries in the world. They need to trade, but it should be on fair terms that respect their environment, their communities, their cultures and their democratic decision-making.

The Green Party is calling for fundamental changes in trade policy. Fair and sustainable trade would support development options for our Pacific neighbours. We would support small business and community-based enterprise to develop high value products and services, such as tourism, that build on the unique Pacific story. We would support local food production and help connect rural producers to markets. We would ensure that aid goes to the people who really need it, for investments like education and health care, rather than being diverted to benefit companies and consultants. We would tackle climate change which is the biggest threat to the Pacific’s people, its environment and its survival. And we would support the Pacific’s people in determining their own path for the future.

 

Barry Coates is a Green Party list MP, based in Auckland.

 

 

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8 Comments

  1. Mike in Auckland says:

    “The Green Party is calling for fundamental changes in trade policy. Fair and sustainable trade would support development options for our Pacific neighbours. We would support small business and community-based enterprise to develop high value products and services, such as tourism, that build on the unique Pacific story. We would support local food production and help connect rural producers to markets. We would ensure that aid goes to the people who really need it, for investments like education and health care, rather than being diverted to benefit companies and consultants. We would tackle climate change which is the biggest threat to the Pacific’s people, its environment and its survival. And we would support the Pacific’s people in determining their own path for the future.”

    That does all sound good and fair, but will hardly lift the smallest Pacific Island nations out of dependency and low level economic output levels.

    While much more can be done for places like PNG and other larger states and populations, which are not part of this agreement, it is hard to see what special economic opportunities there are for such small states like Samoa, Tonga, Cook Islands and even smaller ones.

    They already rely on selling the rights to fish in their waters, on small quantity local crop production and exports, and heavily on tourism, which only tends to create low paid jobs.

    Perhaps creating tax havens, science hubs or opening casinos will offer them greater revenue streams, but we know how good or bad that does elsewhere, and it is hardly stuff that will be either good or pragmatic things to do there.

    No matter what happens, these isles will remain dependent little states, living partly of aid, tourism, marginal local production and fisheries, perhaps some seabed mining, but I doubt that the Greens want that.

    We are on the best way to ruin the remnants of the native plant and animal environment in New Zealand, with the economic development taking place here, following the rest of the globe, and do we really want to take this to the last isolated islands on the globe, to take place there also?

    Meanwhile the Chinese, Russians and Americans will bribe governments in the region to work with them. Nothing much has changed and will change, I fear.

    How well would Great Barrier Island in the Hauraki Gulf do, as an independent nation and economy on the global market, I wonder, or perhaps Chatham Islands? That gives one an impression of the challenges.

    • Barry Coates says:

      Thanks Mike, from my work with Pacific communities, NGOs and small businesess in Oxfam, it was clear that there are many options. These are such small islands and small populations that they don’t need huge businesses to provide employment and income.

      There are already some great NGOs and businesses selling high value products from small farmers in rural areas into international supply chains – pure virgin coconut oil going into Body Shop products, natural cosmetics being sold around the world and high quality vanilla being exported.

      There are growing numbers of tourists who value the unique environment and culture instead of cheap mass tourism. And some fantastic music, culture, art and sport that is valued internationally. The Pacific has many exciting opportunities, built on their unique story. Unfortunately, restrictive FTAs like PACER PLus won’t help them in encouraging these kind of initiatives.

      • Andrea says:

        ” they don’t need huge businesses to provide employment and income. ” Is that ALL? How elegantly stingy can you be?

        “growing numbers of tourists who value the unique environment and culture instead of cheap mass tourism.”

        I remember! I remember! That’s what they said about US! And look where we are now… (blecch!)

        You’ve already got pollution problems and rising costs. Blokes behaving badly in various nation-states. Tardy education opportunities and that sickly, always there ‘patronage’ and paternalism. This from a tribe that witters on about privilege and colonialism…

        Will Labour rework this agreement into something forward-looking, practical and fair for all parties? NZ First?

        After the hand-wringing comes the rolling up of sleeves and the hard look in the mirror. Peek cautiously. No one needs another seven years of bad luck.

  2. Mike in Auckland says:

    I may strongly suggest the Green Party cancels the Memorandum of Understanding and runs it alone, to try and get close to, or over, twenty percent of the vote, as Labour are endlessly screwing up:
    http://www.radionz.co.nz/news/political/333570/labour-party-officials-step-in-to-help-disgruntled-interns

    Too much damage control:
    http://www.radionz.co.nz/national/programmes/checkpoint/audio/201848528/little-responds-to-criticism-over-party-s-intern-controversy

    http://www.radionz.co.nz/news/te-manu-korihi/333597/awataha-marae-rejects-substandard-housings-claim

    Perhaps James Shaw should try an Emmanuel Macron approach and win the electorate?! Also then run a strong campaign challenging NZ First, besides of Nats and ACT, are you up to this???

  3. Mike in Auckland says:

    So some blogs slag off at others, and when it comes to the ones they like to support, they do not publish what people may think, that makes blogs die a slow but sure death, I observe it on The Standard.

  4. Gosman says:

    You quite obviously don’t understand the point of foreign trade. I’ll give you a hint though. It isn’t to enable people to export.

  5. Mike in Auckland says:

    As the Greens used to be the party I gave my party vote for, some explanations to offer a real energy alternative may help.

    Have a look at these reports:
    http://www.renewableenergyworld.com/articles/2016/10/german-renewable-power-surcharge-increases-by-8-percent.html
    https://www.forbes.com/sites/uhenergy/2017/03/31/100-renewables-by-2050-germany-pays-the-price-for-its-ambition/#31cbe4981e98
    http://ec.europa.eu/eurostat/statistics-explained/index.php/Electricity_price_statistics

    That is just a glimpse. There would be better info if considered longer term, and that is, that the energy generation change has cost a country, or rather the consumer in the country, that is Germany, a hell of a lot of money to pay.

    We face a massive challenge, that nobody is honestly answering, how to change away from the fossil fuel waste society we have, to a truly sustainable society.

    Wind and solar still costs more if considered honestly, to produce electricity, but we have some preach it as the absolute solution to our problems.

    We are facing a storm into our faces, as industry will not function without fossil fuels, under given market conditions, and we as consumers will have to pay more, no matter what. So perhaps we need more honest answers to what needs to be done, or are you suggesting we go ‘nuclear’?