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.
