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Interview with Pacific Network on Globalisation (PANG)

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Interview with Lice Cokanasiga and Adam Wolfenden of Pacific Network on Globalisation (PANG)

14 November 2019

by What’s the current state of PACER+ (Pacific Island Countries Trade Agreement) that was signed in 2017?

PANG: So far only Australia, New Zealand and Samoa have ratified it. PNG, Fiji, Palau, Marshall Islands, Federation Micronesia either walked away or have no interest in signing it. The Cook Islands has been reported as saying they will ratify very soon but there was some uncertainty as to whether or not they would be able to access the ’development assistance’ component on account of them now being classified as a developed country. It’s pretty hard to find information on where the ratification process in some countries is but it seems it’s going slowly. The initial deadline for the entering into force was the start of 2019 so they obviously missed that deadline.

What are the main issues?

Pacific countries have committed to slash 88% of tariff lines on average, 99% in some sectors. There’s a lot of commitments in the service sector, broad commitments in investments. It’s very comprehensive and means a significant restructure of their economy but they are not getting anything in return. They already had quota-free access to Australia. The development assistance is very little and it’s actually coming from existing aid budgets. So there’s high costs for Pacific countries with very little gain.

Are there specific concerns in Pacific countries?

Papua New Guinea and Fiji were particularly concerned about the goods chapter, in relation to the safeguard measures and industry protection – which is probably why PNG and Fiji walked away. On investment, I think countries were brought into the idea that FTAs bring more investment so if they sign PACER+ it would bring more foreign investment, even though we tried to explain to them that it’s not how it works. People don’t make investment decisions solely based on FTAs and the problem with PACER+ is that it restricts how governments can direct an investment and the requirements it can put on an investment to ensure that the benefits are maximized. Take tourism, for example, sure there are jobs there for the low-level service sort of work but if you are mandating that they have to have local content and quotas around people in managerial levels and upskilling of people, then surely that furthers the benefit of that investment and it’s better for everyone. The other thing is government revenue that has always been a problem for a lot of countries, for Vanuatu in particular. They made giving some budget area assistance a criteria for ratifying the agreement.

How high in the agenda of Australia and New Zealand PACER+ is, compared to RCEP and the TPP?

Obviously the return on RCEP (Regional Comprehensive Economic Partnership) and CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) for Australia is much bigger than PACER+. But the genesis of PACER+ is more for New Zealand and Australia to maintain their commercial dominance, especially on services and investment. As for goods, they’re aware they’ll slowly lose out to China on the merchandise trade. If you look back at the history of PACER, it was a framework agreement that basically said: if a Pacific country is going to negotiate a trade deal with a developed country then it has to offer that to Australia and New Zealand. So when the Economic Partnership Agreements with the European Union came along and supposedly triggered that clause with PACER, that’s how PACER+ talks started. It’s not an insignificant market for New Zealand and Australia, and they don’t want to lose it because of proximity and colonial history.

What kind of movements are involved in the struggle against PACER+?

At PANG we rely on support from other entities in a broad way. When we did petitions to present as a regional response, we had a lot of support from national and regional groups. Feminist groups in particular have always been strong on the narrative of what free trade deals are and on economic and patriarchal situations. But it also depends on the countries and how coordinated groups are. In Vanuatu, for instance, you get support from the Council of Chiefs and the private sector as well.

Moving on the post-Cotonou talks, how advanced are the negotiations?

It’s hard to get access to all the documents that we would love to have access to. The negotiating mandates have been released by the EU and the ACP and the language is pretty grim. The EU’s objectives are very much an extension of trade under the EPAs (Economic Partnership Agreements), their minerals policy, access to resources in Pacific, seabed and fisheries to ensure they are not left out. The trade language is very aggressive. It’s all about regulatory reform such as transparency, consultation, etc. in changes in policies and creating an investor friendly environment. It’s all pro-business. But it’s also pretty disappointing on the ACP side. They seem to be onboard with the way trade liberalisation will deliver benefits, even though they say don’t want to make WTO+ commitments as well. On the one hand they’re asking for technical assistance and some funding to implement commitments made elsewhere, and they’re also buying into this idea that they need to attract foreign investors. On another note, the ACP countries wanted to negotiate as a block to try and leverage their strength and numbers but that was pretty quickly broken up by the EU so they’re doing it with regional pillars. Things are progressing from what we’re hearing from officials. There’s still some contention around the inclusive and sustainable development chapter, which deals with all the trade stuff. The Pacific put out a CSO statement, which was well received because it’s clear and organized. The pressure is around the expiration of the Cotonou agreement in 2020.

What about China’s influence in the region, notably as part the Belt and Road Initiative?

Presently, seven countries in the Pacific officially recognize China, namely, Papua New Guinea, Vanuatu, Fiji, Tonga, Niue, Cook Islands, Samoa with Solomon Islands joining very recently.

China’s presence and influence is causing a lot of discomfort amongst traditional economic partners in the Pacific i.e. Australia, the US, France and New Zealand. China’s rapid response for loans, when requested, mainly to build or rebuild infrastructure is also causing a lot of concerns for Australia because in July of 2019, Australia launched the Australian Infrastructure Financing Facility, as part of their “Step Up” Pacific engagement. For instance, Australia has also complained about the new Luganville wharf in Vanuatu funded by the Chinese banks and government. The close proximity of Vanuatu to Australia has raised security concerns and also the possibility of China setting up a naval base in Luganville.

In November of 2018, PNG hosted the APEC summit where Prime Minister O’neill invited Pacific Island Leaders to a session with President Xi Jinping of China. The outcome of this meeting saw Tonga being able to defer their loan repayments for five years. Fiji has committed to the Belt and Road Initiative but hasn’t joined in.

China has increased its loans to Fiji, Vanuatu, PNG and others. But Australia remains the number one development partner for Pacific Islands unless a planned Chinese loan to rebuild PNG’s roads and infrastructures comes to life, then China will take over Australia as the leading development partner in the region.

Chinese Investments cover schools and sporting facilities, hydro electricity projects, real estate and services, natural resources such as fisheries, gold, copper, bauxite, and roads.

As of 2016, two trade between China and the Pacific Islands was valued at US$7.5 billion. [1]

Contact PANG at