Showing posts with label Pacific Free Trade Agreement. Show all posts
Showing posts with label Pacific Free Trade Agreement. Show all posts

Monday, March 05, 2012

X-Post-Foreign Policy In Focus: Vacuuming Up the Pacific's Resources

The 11th round of the Trans-Pacific Partnership (TPP) negotiations is currently taking place in Melbourne, Australia. Although negotiators have agreed to the broad outlines of the TPP agreement, a new trade issue has created a snag in the process: the inclusion of investor-state dispute settlement provisions. Australia has refused to accept the investor-state dispute settlement, and U.S. industry associations are urging President Barack Obama to overcome these objections. These investor-state dispute settlement provisions have been included in U.S. investment treaties and trade agreements with more than 50 countries, and there are over 2,500 of these accords currently on record. These provisions, however, give advantages to large economies and can cripple small island states like Pacific Island nations.

Obama describes the TPPA as a "a trade agreement for the 21st century" that improves on and rectifies the past problems in U.S. trade and investment treaties and trade agreements with more than 50 countries, and there are over 2,500 of these accords currently on record. These provisions, however, give advantages to large economies and can cripple small island states like Pacific Island nations.

Nine countries are currently negotiating the TPPA:the United States, Australia, New Zealand, Chile, Peru, Brunei, Vietnam, Malaysia, and Singapore. Japan is in preliminary talks, and Canada and Mexico are looking to join. Although the negotiations are being held in secret, leaked documents confirm that the TPPA is a “NAFTA on steroids.” Contrary to democratic practice, the documents connected to the negotiations will remain secret for four years after being signed or dismissed.
Arnie Saiki

"For most Pacific Island countries (PICs), trade has been a series of disadvantageous agreements with larger economies that negotiate access to island resources. The PICs have remained economically tethered to larger economies despite attempts at small-island integration by sub-regional institutions like the Pacific Island Forum (PIF) or the more progressive Melanesian Spearhead Group (MSG). Just last year, a new sub-regional group called the Polynesian Leader’s Group challenged the MSG, which had made waves by advocating participation in an alternative economic system."

The United States is leading the negotiations and has a great deal of influence over the outcome of the agreement, which covers a vast range of subject matters, including tariffs on goods, trade in services, labor and the environment, telecommunications, and intellectual property. For Pacific Islands, however, the investor rights chapters may offer the greatest challenge to Pacific Island environmental resources.
The small Pacific Island economies are not formally a part of the TPPA negotiations and yet they are tethered to the larger economies of Australia, New Zealand, Chile, France, and the United States. Pacific Island countries are also not member economies of APEC (the economic regional forum that spawned the TPPA). They participate only as observers through the Pacific Island Forum, which facilitates the neo-liberal economic agenda through a basket of sub-regional agreements like the Pacific Island Countries Trade Agreement (PICTA). Still, larger economies pay considerable attention to the Pacific Island countries because of their resources, like fisheries, precious metals, and minerals, as well as their strategic value as military outposts and waterways.

Pacific Trade

Throughout Oceania, native peoples separated by thousands of miles share similar cultural and often linguistic bonds. Long before contact with the west, Pacific peoples not only were connected by the currents of their ocean homes but had established trans-pacific navigational routes, trade, and for the most part a sustainable relationship with their environmental resources.
For most Pacific Island countries (PICs), trade has been a series of disadvantageous agreements with larger economies that negotiate access to island resources.

The PICs have remained economically tethered to larger economies despite attempts at small-island integration by sub-regional institutions like the Pacific Island Forum (PIF) or the more progressive Melanesian Spearhead Group (MSG). Just last year, a new sub-regional group called the Polynesian Leader’s Group challenged the MSG, which had made waves by advocating participation in an alternative economic system. By joining with a bloc like the BRICS (Brazil, Russia, India, China, South Africa), Pacific Islands might do better than the neoliberal programs advocated by PIF.

In comparison with other emerging economies, Pacific Islands have poor performance records. Much of the blame rests on the neo-liberalism of regional institutions like the ADB and APEC. Since the late 1990s, an increase in aid-based relationships has not only stunted the development of many island peoples but also provided a dumping ground for overstock and consumer detritus. Although private investment has had some success in developing traditional farm and fishery practices, these projects are dependent on funding from the Asian Development Bank (ADB), the EU, the World Bank, and U.S. and Australian aid organizations.

In a 2006, the ADB examined small island states among the developing member economies, suggesting that isolated and vulnerable economies remain under economic stress as a result of their governments’ inability to guarantee the basic security of their people.

In 2008, as a response to its self-funded study, the ADB worked with international partners to deliver infrastructure services in the Pacific to streamline private-sector investment to industrial sectors like energy, water, waste, security, and telecommunications, as well as mining, cash crops, and fisheries. The Pacific Region Infrastructure Facility (PRIF) is one such organization.
Privatization is the latest vehicle for the exploitation of island resources. But these international investment projects, along with the bilateral investment treaties that support them, have yet to provide any long-term sustainable cultural or environmental benefit to small island economies.

 Impact of the TPPA

Embroiled in a decades-long struggle for independence from Chile, Rapa NuiTPPA that Chile signed in 2005. Since joining the TPPA, Rapa Nui has been fighting a tidal wave of development proposals for mining projects, airfields, ports, casinos, and hotels. These projects, which would irreparably change a UN World Heritage site, primarily benefit the Chilean government and the investment regime. For example, through the transnational Transoceanica Holdings, international investors funded the development of the Hotel Hanga Roa on land belonging to the Hitorangi clan. In 2010, as the Hanga Roa prepared to open, members of the clan occupied the hotel. Rapa Nui erupted in violence when Chilean President Sebastián Piñera sent navy cruisers and hundreds of armed security forces to end the unarmed protests.

In recent discussions around the TPPA, little attention has focused on how a regional “Asia-Pacific” free-trade agreement will actually impact Pacific Islands. But some recent examples of investments in the region are quite revealing. In Papua New Guinea, Canada’s Nautilus Minerals has launched a new deep seabed-mining project called Solwara 1. Large deposits of gold, silver, nickel, copper, manganese, and other rare-earth minerals are buried deep in the seabed, and the method for extracting these minerals – basically vacuuming up the seabed onto a barge – has only recently been developed.

Little is known about the deep seabed, and no conclusive environmental study has been completed. But the life that thrives in this unusual environment is sulfur-based rather than oxygen-based. When the sludge is extracted onto a barge, it is then separated from the commodity metals and minerals and then dumped back into the ocean. The impact of this sulfuric sediment absorbed by fish or reefs is unknown. However, sulfuric changes in the environment negatively affect oxygen-based plants and animals, as people living with vog (volcanic smog) know all too well.

After the International Seabed Authority changed the regulations for deep seabed mineral extraction, Nautilus acquired even more international investment to lease large tracts of deep seabed in Fiji, Tonga, the Solomon Islands, and New Zealand. These changes have prompted other Canadian, U.S., and Australian mining companies to lease seabed areas in the Exclusive Economic Zones of many other Pacific Island Countries. This mining deregulation, which has resulted from agreements like the TPPA, will likely push ocean biodiversity closer to what the International Programme on the State of the Ocean describes as “irreversible, catastrophic change.”

Consider also the case of Endeavor Mining, which recently offered the Cook Islands government a partnership proposal worth $1 billion over three-and-a-half years for mineral and mining rights to the seabed resources. Typically, since Endeavor is also an independent merchant bank focusing on the global natural resources sector, it will likely offer investors a package of financial incentive benefits that will reward investors at the expense of a state whose 2009 GDP was just short of $200 million.

If made responsible for cleanup in the event of accidents, island governments and taxpayers could be liable for any financial losses. As a result, Cook Islanders might find themselves in an ecological catastrophe and mired in debt. Additionally, to qualify for loans to pay back this debt, multilateral lending institutions may well insist on austerity measures that would lead to further deregulation. Locked into a variety of competing investor agreements, the Pacific islands will find themselves in a race to the bottom, both economically and environmentally.

If the investor-rights “chapter 11” provisions in NAFTA provide any clues about how the TPPA will privilege international investor agreements over government regulations, the Pacific Islands will be opened up to tremendous resource exploitation. Environmental regulations are all that protect the fragile biodiversity of the region. And the costs associated with the despoliation will largely fall on the shoulders of Pacific islanders themselves. The corporations will reap the profits; the Pacific Islands will have to pay the long-term bill.

Looking Beyond the TPP

The average GDP of the smaller developing Pacific islands is around $350 million, with the exception of Fiji, whose annual GDP is around $3.5 billion, and Papua New Guinea at around $9.5 billion (for perspective, New Zealand’s GDP is around $125 billion). There is a tremendous gap between the combined GDP of the islands and the value of the resources exploited from these countries.

This gap represents a strategic imperative for Pacific island economies to integrate along the lines of sustainable trade and sensible environmental regulations. The TPPA is certainly not an equitable integration scheme.

Rather, this NAFTA of the Pacific is like tossing a shark in a fish tank. The TPPA will give even less room for PICs to negotiate positive environmental regulations or manage to accrue social or economic benefits from their natural resources.

Pacific Islanders need to be part of the negotiating process to ensure they are at least able to integrate their commodity resources, since they are critically unequipped to develop their economies to scale with the larger economies. They also need to create a regional regulatory agency that can independently manage the various trade and investment agreements. Without democratic input and democratic control, the TPPA will vacuum up all the resources of the Pacific and leave a poisoned ocean in its wake.
Recommended Citation:
Arnie Saiki, "Vacuuming Up the Pacific's Resources" (Washington, DC: Foreign Policy In Focus, March 5, 2012)

Further Reading :

Pacific warned of hidden dangers in Obama's new TPP push (Radio Australia)

The Trans-Pacific Partnership-A New Paradigm Or Wolf In Sheep's Clothing?
Economists Issue Statement on
Capital Controls and the Trans-Pacific Partnership Agreement

TPP-The NAFTA of the Pacific
 How Brazil Challenged Europe and Won.

Taxonomy of Dolls and Mutants (Radio Lab)

SiFM post on seabed mining:

SiFM post on TPP and America's Pacific Century Pivot:

Club Em Designs

Saturday, May 02, 2009

Clenched Fist, Open Hand- The Curious Case Of A Faltering Forum In The Pacific.

In a follow up to an earlier SiFm posting (Jan 31st 2009), titled "Trans-Tasman Foie Gras Of Pacific Forum", which foreshadowed the suspension of Fiji from the Forum and the unintended consequences derived from the ultimatum.

The Pacific region free trade proposal and Fiji's participation in it, has been largely decided by the automatic suspension from the Pacific Forum. A spokesperson for the New Zealand Trade Minister has been quoted in New Zealand Herald article, stating that Fiji will not take part.

The excerpt of New Zealand Herald article:

Fiji will not take part in Pacific free trade talks

11:31AM Monday May 04, 2009

Fiji will not take part in talks to set up a Pacific free trade area while it is suspended from the Pacific Islands Forum, a spokeswoman for Trade Minister Tim Groser confirmed today.

Fiji has not been invited to informal talks in Auckland this weekend called to discuss ways to progress a Pacific Agreement on Closer Economic Relations (Pacer).

Trade ministers from the forum's 15 other member states were invited to the Auckland meeting, although not all of them will be able to attend. Pacer has been on the agenda for more than a decade, with the aim of helping island nations develop their economies.

New Zealand and Australia are keen to set it up but they are looking for an arrangement which benefits the small economies rather than their own. "The general thinking is that the final product needs to be tilted in favour of the Pacific, one source said.

Foreign Minister Murray McCully spoke on Friday about the trade imbalance between New Zealand and the islands. "Our billion-dollar export trade into the Pacific has been reciprocated by imports from Pacific nations so miserly that they should be a source of national embarrassment," he said.

New Zealand research and education network Arena yesterday suggested the Pacer talks be put on ice."If Fiji is excluded, what purpose do the negotiations have when one of the two largest economies in the Pacific, alongside Papua New Guinea, is not at the table," said Arena spokeswoman Jane Kelsey. The region's major powers wanted to announce the start of a formal process of consultations leading to negotiations at the forum summit meeting in Cairns in August, she said.


What the NZ Herald article did not mention in an obscene display of omission, that many Pacific Island States were treating the free-trade proposal as if, it were infected with Swine flu virus.

Also, the decision to join the free-trade treaty is a bi-lateral treaty between willing nations and it is not a decision that Australia or New Zealand can arbitrarily force on smaller and weaker nations. The fact is, this free-trade treaty is a concept that Trans-Tasman nations want more than the Pacific island states. Not the other way around. It has become evident that since the posting highlighting the Trans-Tasman belligerence in the region, other voices have joined the chorus highlighting this sad and serious dichotomy.

A local coordinator for the regional watch dog and advocate for Fair Trade and Globalisation in the Pacific (PANG) contributed to an article published in Feb 12th issue of Fiji Times, which illustrated how Australia and New Zealand pushed the free trade agenda through the South Pacific Forum.

The excerpt of F.T article:

Australia, NZ push trade agendas

Thursday, February 12, 2009

Next week Pacific Island Country trade officials will meet with their counterparts from Australia and NZ to discuss the structure and coverage of free trade negotiations that may get underway later this year. Under the Pacific Agreement on Closer Economic Relations, Pacific countries must begin discussions about a possible free trade agreement (called PACER-Plus) with Australia and NZ if free trade agreements are pursued with any other party.

Both Papua New Guinea and Fiji initialled a free trade agreement (covering goods trade) with the European Union in late 2007, and Australia and NZ feel that now is the time to negotiate PACER-Plus with all of the Forum Island Countries. Australian and NZ government officials have been quick to assert that PACER-Plus would be designed to benefit the Pacific - while down-playing potential negative impacts for the Islands and benefits to their own countries. However, these assurances are starting to have a hollow ring to them, as both countries pursue aggressive strategies (mainly behind closed doors) to stack the deck in their favour even before negotiations start.

Pawns in a power game

Pacific Island Countries have had a dismal experience negotiating a free trade agreement (an 'Economic Partnership Agreement' - EPA) with the EU in recent years. In those negotiations, the Pacific, along with African and Caribbean countries simultaneously negotiating similar deals, failed to secure meaningful concessions from the EU, and few countries are interested in signing a new deal. Recognising this, Forum Island Country trade ministers decided that a new Office of the Chief Trade Advisor should be established separately from the Forum Secretariat to help the Islands in negotiations with Australia and NZ.

In March 2008, Pacific trade ministers decided the Chief Trade Advisor should be "the only point of contact between ANZ and the FIC's for PACER-Plus" and that "the CTA takes responsibility for the PACER-Plus negotiations with ANZ on the basis of mandates and negotiating instructions from the FIC Trade Ministers".

However, Australian and NZ officials are resisting attempts to have in place, well before negotiations begin, a new Chief Trade Advisor to help organise the region's negotiating positions - critical, given the diversity of Pacific countries, and national-level capacity issues.

Instead of supporting the Pacific's Chief Trade Advisor proposal, Australia announced (in April 2008) a "trade fellowship program" whereby Pacific trade officials are trained by Australians to negotiate with them. Australian officials also announced money would be provided at the national level for Forum Island Countries to undertake studies on PACER - a far cry from a regional office that can guide research and establish strong negotiating positions.

At the Forum Trade Ministers' meeting in the Cook Islands in July, 2008, Pacific trade officials reported bullying tactics, a divide and rule strategy and explicit threats to remove key Forum Secretariat staff. This behaviour was exhibited by both Australian and NZ officials, who pushed for Pacific Trade ministers to agree to begin negotiations on a wide-ranging free trade agreement during 2009. Officials from several countries put up a fierce resistance to attempts to fast-track PACER-Plus - attempts made by ANZ officials and their key Pacific allies, namely Tonga and Nauru, at that meeting.

Australian officials were so disappointed with FIC Trade ministers' refusal to fast-track the negotiations that they told Pacific media Australia would not commit funds to set up the CTA office because "it did not regard the outcome of the July 2008 Forum Trade Ministers' meeting as constituting an adequate commitment to negotiations that will lead them to fund the CTA".

Having failed to get their way with the Trade ministers, Australian and NZ officials took their battle to the annual Forum Leaders' meeting in Niue to secure favourable language. During that meeting, Pacific leaders met separately from Australia and New Zealand, and issued a press release which stressed the need for "careful preparations by Forum Island Countries (FICs), both individually and collectively, before consultations began with Australia and New Zealand" and for the early appointment of a Chief Trade Advisor to assist the FICs in realising their shared objectives.

However, such caution about entering PACER-Plus negotiations with Australia and NZ was not reflected in the outcomes document of the Niue meeting - where Australia and NZ leaders were present. This reflects the position of Australia and NZ as major donors in the region, and the importance that Pacific leaders place on maintaining good relations with Australia and NZ. It is not the 'Pacific way' to confront such partners directly.

The Niue meeting indicated that Forum leaders would direct trade officials to "formulate a detailed road map on PACER Plus, with the view to leaders agreeing at the 2009 Forum to the commencement of negotiations". This is an outcome Australian officials are happy with, especially as Canberra will host the 2009 Forum Leaders' meeting.

Rigging the game?

PACER-Plus negotiations could lead to a free trade agreement that will have radical implications for Pacific Island economies and societies. Any agreement will have a much smaller impact on Australia and NZ. A bad agreement could lead to a closing off of policy options that are used to stimulate development in the Islands, increased pressure for privatisation and an undermining of access to basic services.

Certainly, PACER-Plus will lead to business closures and thousands of job losses in Pacific countries - problems that will be exacerbated because many Pacific states will lose much needed government revenue if they cut tariffs.

One study commissioned by the Forum Secretariat found that for around half the Pacific Island Countries, liberalisation will lead to government revenue losses of 10 to 30 per cent per year. It is vitally important for Pacific governments to "get this right".

Despite this, the approach taken by Australia and NZ to PACER-Plus discussions in 2008 indicates a willingness to fast-track the process (to ensure negotiations begin at the 2009 Forum Leaders' Meeting), to derail any effective regional negotiating machinery (by refusing to support the Pacific's Chief Trade Advisor proposal and funding national-level training and research instead) and to manipulate Forum Secretariat meetings to secure their priorities.

Next week, PIC trade officials will meet with their counterparts from Australia and NZ (in Adelaide, Australia) to discuss the "road map" for PACER-Plus. Discussions will cover the structure, timing and coverage of potential negotiations. Australia and NZ are keen to begin (and conclude) negotiations as soon as possible, and both countries want to negotiate as wide a range of areas as possible.

The meeting is also likely to discuss the Pacific's latest CTA proposal (which was revised on request from Australian officials). Despite the fact that this meeting will help set the structure of the Pacific's most important trade negotiations in decades, there is unlikely to be any public oversight of the meeting.

Just as concerning is the fact that many PIC trade officials are already in Adelaide this week for the second module of a 'capacity building' program at the Institute for International Trade. This capacity building program targets "upcoming negotiators" from all 14 Pacific Forum Island Countries.

During the first module of training last year, Pacific trade officials engaged in "relevant debates" with "Australian negotiators who will be part of future PACER-Plus negotiations" as well as discussing some of the Pacific's "key negotiating priorities".

It is very concerning that Pacific officials (who may be tasked with developing Pacific negotiating positions) are sitting through carefully designed training aimed at concluding PACER-Plus and are discussing key issues for the negotiations in forums where Australian officials are present. There are many alternatives for independent capacity-building for Pacific trade officials that should be explored.

In another move that could weaken the Pacific's regional negotiating power, it appears the axe has fallen on one of the region's most respected trade advisors, Dr Roman Grynberg, whose contract with the Forum Secretariat is not being extended. Dr Grynberg is not a popular figure with trade officials from developed countries, who often see him as a key stumbling block for advancing their trade priorities.

In 2003, The Guardian newspaper highlighted a letter between the NZ Ministry of Foreign Affairs and Trade and the British Government colluding to get rid of "unsympathetic" trade officials within the Commonwealth Secretariat.

One such unsympathetic trade official was Dr Grynberg - whose work advocating on behalf of developing countries was seen as derailing free trade discussions. Reasons for his contract not being extended with the Forum Secretariat were based on a performance review that found him to 'lack leadership' and not being 'client focused'.

The question that begs to be asked is, which client(s) is unhappy with Dr Grynberg's work? Whatever the reasons for his removal, his absence means that the PIC's have lost an important critical voice prior to going into negotiations for a free trade agreement with the Islands' most important trading partners.

Pacific Way

The late Ratu Sir Kamisese Mara coined the term the 'Pacific Way' to reflect a Pacific way of diplomacy based on conversation, respect and mutual consensus. In recent years Australia and NZ have moved from strength to strength in their quest to replace the Pacific way with their way. It appears their goal is to impose their ideology, their free trade agenda, their institutions and operatives, their economic interests, their political authority and their strategic influence on the islands of the Pacific.

If the approach taken by Australia and NZ to PACER-Plus in 2008 is an indication of things to come, then pressure is now on Pacific leaders to take back the initiative and demand an approach to trade that reflects Pacific concerns (alternatives to PACER-Plus could for example include improvements on the existing SPARTECA scheme).

PIC Trade ministers and their officials, and the Pacific Islands Forum Secretariat Secretary General Neroni Slade are more than ever faced with the task of stemming the tide of ANZ influence. If they are not able to, we could see the beginning of the demise of the Pacific Way and the reign of the ANZ Way.

* Maureen Penjueli is Coordinator of the Pacific Network on Globalisation.

The FT article alluded to the murky and unceremonious manner of sidelining the former Director of Economic Governance at the Pacific Forum Secretariat namely, Dr. Roman Grynberg, who interestingly enough penned an outstanding article titled "Who Owns The Forum" published in the Fiji Times on March 9th 2009.

Grynberg also wrote an article titled "Negotiating With Friends: A Free Trade Deal With Australia and New Zealand", warned the Pacific Islands leaders in no uncertain terms, to be wary of this Free Trade Agreement being brokered by the Trans-Tasman duo. Grynberg's sentiments were echoed by another academic, Dr. Jane Kelsey in an article titled "Big Brothers Behaving Badly".

Another SiFm post, outlined the skirmish of opinions between Western Samoa's Prime Minister and American Samoa's Congressman; both issuing public comments on Fiji. Since the post, the Congressman has reiterated his view that Australia and New Zealand heavy handedness and insulting views on Fiji.

The Samoan PM later backpedalled from his earlier stance and ridicule, realizing his own tenure is at stake, after the SiFM post highlighted an online survey of Samoan readers that disagreed on the P.M's remarks on Fiji.

Subsequently, the American Samoan Congressman was quoted in another RNZ article, stating that the Forum's suspension of Fiji was no solution.

The excerpt of RNZ article:

American Samoan Congressman says Fiji suspension is no

Posted at 04:28 on 01 May, 2009 UTC

American Samoa’s member of the United States Congress, Faleomavaega Eni Hunkin, says suspending Fiji from the Pacific Islands Forum will not solve anything.

Faleomavaega says it will simply add to the country’s political and
economic woes. He says New Zealand and Australia have been too punitive and should have been taking a more constructive approach such as maintaining a dialogue with Commodore Frank Bainimarama’s regime.

“I’m no more supporter of a military takeover but the fact that Fiji has
a history of three military coups and a civilian takeover with three
constitutions, that should tell anybody that they have very serious problems that you cannot just simply dismiss by saying ’let’s have an election’. That’s not going to solve the problem.”

Faleomavaega Eni Hunkin

News Content © Radio New Zealand InternationalPO Box 123, Wellington, New

All in all, the litany of bullying outlined by PANG and the documented acts of self-dealing by Trans-Tasman policy advisers as, Dr Grynberg had alluded to, finally puts a different perspective into the Forum operations, one that is well different from the flawed narratives of Australia and New Zealand.

Fijian academic, Dr. Steven Ratuva is quoted in Radio NZ web article that, Fiji's expulsion is likely to hurt other smaller island nations.

The excerpt of RNZ article:

Expulsion from Forum likely to hurt small countries rather than Fiji

Posted at 06:10 on 04 May, 2009 UTC

An academic from the University of the South Pacific says Fiji’s suspension from the Pacific Islands Forum could hurt its small neighbours more than Fiji itself.

Dr Steven Ratuva says he has spoken with people from the interim government who believe the suspension will have minimal impact on
Fiji. But he says its growing isolation from the rest of the Pacific will
hurt small countries in the region that depend on it.

“What’s going to happen is that regional cooperation as we knew it for a
long time since 1972 is going to go through a significant and substantial shift. And the shift is going to affect mostly the small island states like Kiribati, Tuvalu and Tonga who rely significantly on Fiji for economic survival.”

Dr Ratuva says the suspension will see Fiji fall more under the influence of China, while Australia and New Zealand will lead the other powerblock in the region.

News Content © Radio New Zealand InternationalPO Box 123, Wellington, New

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