Islands Business | July 2009
TRADE: AUSTRALIA’S GETTING THE PLUS IN PACER
Is Canberra a bully? Or are islands ministers softies?
Out of the nine resolutions made by trade ministers in the Pacific at their meeting in Samoa last month, seven were said to be concessions to their bigger neighbours of Australia and New Zealand.
These concessions relate to the proposed free trade agreement between the two Trans-Tasman neighbours on the one hand and the 14 smaller Pacific islands countries on the other, now commonly referred to as PACER Plus.
Although all 16 countries are members of the powerful political alliance—the Pacific Islands Forum—the Pacific Agreement on Closer Economic Relations (PACER) supposedly recognises the different economic status among Forum members.
Delegates who spoke on the condition of anonymity to this magazine related the strong push by Australia to have its position accepted at the Samoa meeting.
A closer read of the trade ministers meeting’s outcome statement issued on June 17 seemed to bear what these delegates claimed.
Resolution number one is a major plus for Canberra.
Ministers resolved that negotiations on PACER Plus will start “after the conclusion of the Pacific Islands Forum Leaders meeting in Cairns in August 2009”.
This, critics say, is a huge concession since the PACER text itself articulates a negotiation start date of 2011.
Stepping up the tempo
Australia, on the other hand, pointed to last year’s decision by Forum leaders in Niue in which they wanted their summit in Cairns this August to decide on a start date.
Prime Minister Kevin Rudd’s trade minister Simon Crean had stepped up the tempo since the Niue summit traversing the ocean and urging islands members to embrace PACER Plus and launch negotiations.
He publicly touted the results of a study the Australian Government funded (through AusAID) that trade will increase 30% between the islands and Australia and New Zealand once the agreement is implemented.
That study was conducted by the University of Adelaide which is now offering negotiation training for Pacific Islands trade officials.
Former director of trade at the secretariat of the Pacific Islands Forum Dr Roman Grynberg, who complained that Australian pressure resulted in the non-renewal of his contract, labelled such sessions as “re-education camps.”
Now that Crean has got his islands counterparts to recommend to islands leaders that PACER Plus negotiations should commence “after the conclusion” of the Cairns’ summit, ministers seemed to have thrown in a spanner to the works by stating that talks would not begin immediately after the Cairns meeting concluded on August 7.
A framework for such negotiations would be required, the ministers resolved at their Samoa meeting, and such a framework would have to be finalised by Forum trade ministers.
They “should meet as soon as practicable following the meeting of the Forum leaders in August 2009.
“They said they will do that in the Federated States of Micronesia (FSM) “not later than November 2009.”
Opportunities for more delays exist still with some islands delegations maintaining they would like national consultations on the impact and benefits of PACER Plus to be held first before negotiations should start. This, they said, should be part of the proposed framework.
Perhaps the biggest plus though for Australia at the Samoa meeting of trade ministers was their decision on the office of the chief trade adviser (CTA) on PACER Plus.
Delegates at the meeting spoke of how Australian delegates lobbied strong and hard to control if not limit the powers of CTA.
Their bullish intervention seemed to have worked judging by the ministers’ resolutions.
Australia and by extension New Zealand did drop their resistance to the idea of getting other donors to fund the office of the CTA.
Apparently the European Union and the Commonwealth Secretariat had expressed their willingness to assist.
Yet in a sudden change of heart, Australia particularly wanted the CTA to be based “as a special unit of the Pacific Islands Forum Secretariat,” a position that caught many islands delegates by surprise.
They said from the very beginning, it was Canberra who had insisted that the CTA could not be located at the Forum Secretariat as it ought to play a “neutral” role in the PACER Plus negotiations.
But without notice, the tune changed suddenly in Apia last month and Australia now wanted the CTA to be based at the secretariat headquarters in Suva.
A delegate wondered whether the sudden about turn was in expectation of the appointment of one of their own as a replacement for Dr Grynberg.
The ministers did state in their resolution that the CTA would be based “initially” at the secretariat “prior to the establishment of the permanent office in Vanuatu.”
Whether the move to Port Vila would eventuate, this particular delegate doubted.
What could be viewed as another victory to Canberra was the composition of the board of governors that would oversee the work of CTA.In one of their previous meetings, Pacific islands trade ministers had resolved that officials only would comprise the board.
In Samoa last month, this changed and three ministers would now be included in the board with one of the three ministers to be the chair.
Concerted effort was also directed at the powers of CTA, what the adviser could and could not do.
Canberra, for example, wanted the financial controller of the office of CTA to be answerable to the trade ministers, and not the CTA.
It had also insisted that the salary and benefits of the CTA should be on the level of deputy secretary of the Pacific Islands Forum secretariat, immediately making the position un-attractive to several potential candidates like Fiji’s Kaliopate Tavola and Solomon Islands’ Robert Sisilo.
Sisilo is currently foreign secretary in Nauru, while Tavola, the foreign minister of ousted Prime Minister Laisenia Qarase, now works as a trade consultant.
He was the lead negotiator for the Pacific islands trade ministers during the initial stages of economic partnership agreement (EPA) negotiations with the European Union.
Both Australia and New Zealand have agreed to contribute A$500,000 each every year in the next three years to fund the office of the CTA.
This is less than the US$2.4 million requested by islands countries, a point driven home by the Pacific trade talks’ watchdog PANG, the Pacific Network on Globalisation.
“Whilst the [office of] CTA may now be funded from sources other than Australia and New Zealand, it will have a limited ability to undertake national research and support capacity building for the Pacific to negotiate PACER-Plus,” observed Maureen Penjueli, coordinator of PANG.
Penjueli also accused the two bigger countries of attempting to limit the role of the CTA.
The ministers’ resolution seemed to suggest this, in that while they had agreed in resolution seven that the CTA “shall participate” in PACER Plus negotiations, the very next resolution made it clear that the ministers would have to determine ‘issues which the CTA could negotiate.’
Glaring omission: Arrangements for the office of CTA would also be subjected to “annual reviews”.
A glaring omission in the trade ministers’ resolution in Samoa is Fiji.
With the Pacific Forum leaders’ decision to suspend Fiji’s membership, the island was not invited to the Samoa meetings of Pacific members of the ACP, the Forum trade ministers and the donor roundtable held afterwards.
One island delegate to these three meetings told ISLANDS BUSINESS that one just could not imagine PACER Plus taking place without Fiji’s involvement, given the huge role it plays in regional trade as well as in trading with both Australia and New Zealand.
Another islands delegate said the matter of Fiji’s non-attendance was actually raised at the Pacific ACP meeting of trade ministers.
“Papua New Guinea’s trade minister Sam Abal did speak on the issue, questioning the legality of Fiji’s exclusion,” this delegate said.
“Minister Abal said Fiji has only been suspended from the Pacific Islands Forum but its membership of the ACP was very much intact and as such, it should have been invited to attend.”
Ministers from the Federated States of Micronesia, Tonga and Solomon Islands supported PNG’s position before meeting chair, Samoa’s trade minister Misa Telefoni ruled the issue closed.
A delegation from the European Commission in Brussels which was in Apia for the donors roundtable was reportedly very disappointed at Fiji’s exclusion from the Pacific ACP talks and did express its position to the Forum Secretariat.
The EC, this magazine has been told, was particularly concerned since Secretary-General Neroni Slade Tuiloma is the regional authorising officer for its 10th Regional Indicative Fund of 95 million Euros that covers the five-year period of 2008 and 2013.
According to a legal opinion sought by PANG, Fiji’s exclusion from PACER Plus negotiations does not have any basis in law and could throw into doubt the legality of the entire process.
“The exclusion of Fiji from either an annual or general review on the grounds that Fiji’s participation in the FTMM (Forum Trade Ministers Meeting) has been suspended cannot be justified,” wrote Professor Jane Kelsey of the School of Law at the University of Auckland.
“There is an implied obligation on the parties to PACER to convene such meetings at a time and place from which no party is excluded.
“Failure to do so would render decisions taken at such meetings open to legal challenge.
“It is important to stress that Article 17 formally assigns to the Pacific Islands Forum Secretariat certain administrative and clerical functions under PACER that are separate from the responsibilities that it performs under its legal personality as the Pacific Islands Forum Secretariat.
“The suspension of Fiji from the Forum cannot affect the responsibilities of the Forum Secretariat in relation to Fiji under PACER.”
As a way out of the legal dilemma, Kelsey—in the opinion she gave PANG—believes the Forum has two options. “The only way to proceed with the forthcoming meetings or to make decisions regarding PACER-Plus negotiations in a manner that is consistent with PACER, in the absence of the Government of Fiji, would be if:
(a) Fiji has consented. There is no evidence of such consent; or
(b) the PACER text has been amended to legitimise the exclusion of a party to the agreement from activities in which it would otherwise be entitled to participate.
Article 18 requires unanimous agreement of the parties to any amendment to the text. Fiji’s exclusion from participation makes that impossible per se. Fiji would presumably veto any such amendment if its agreement was sought.”