The Pacific faces many trade negotiations that could significantly impact the region, including the EPA with the EU, PACER with Australia and New Zealand, and WTO accession for some countries. There are concerns that the negotiations will reduce government revenue through elimination of tariffs. This could severely impact essential services since many Pacific governments rely on tariffs for over half their revenue. While trade agreements may lower consumer prices and increase access to certain markets, there are also risks of increased economic dependence, loss of local industries, and restrictions on policy flexibility. Alternatives emphasize support for local and informal economies, self-sufficiency, cultural protection, and fair terms of trade.

1. Trade Negotiations in the Pacific
May 2011

3. Development Challenges for the Pacific
• High proportion of subsistence agriculture
• Weak economic infrastructure
• Inadequate education and training
• Unsustainability and inequity in use of
natural resources
• Rising income inequality and social unrest
• Instability and low government
accountability
• High level of remittances and aid
• High vulnerability to disasters and crises

5. The Pacific also has unique strengths
• A high level of social capital
• Community resilience
• Strong and living Pacific cultures
• Traditional knowledge and biological diversity
• Natural resources:
– Tuna fishery
– Minerals
– Forests
– Oceans
• Beaches, scenery and coral reefs

6. Support a rights
based approach
to development
Everyone has the
right to...
Livelihoods
Services
Security
a Voice
and
an Identity

7. How countries develop
Lessons from economic history:
• Provide space for industries to develop
• Build economic infrastructure
• Build competitiveness through time, scale,
experience
• Support international networks
• Open domestic markets up gradually
Build accountability and active civil society to avoid
government capture by interest groups

8. Work from the
grassroots

9. Oxfam research – Learning from Experience
Purpose:
• Define critical success factors for
sustainable economic development
• Understand link to poverty reduction
• Identify constraints
• Focus on Pacific strengths
• Listen and learn

10. Key success factors
Overcoming inherent constraints:
communications, transport, trade barriers,
inconsistent supply
• Accessing higher value markets
• Niche marketing; certifications, value-adding
and development of a brand
• Partnering with growers
• Improving producer’s incomes
• Support for scale-up

11. Potential directions for development
• Revive import substitution, especially to improve
health and improve food security
• Add value to agriculture:
– Processing
– higher value niche markets eg. organics, fair
trade, supply to Pacific diaspora, etc
• Derive more benefit from natural resources and
regulate for sustainability
• Develop economic base and SMEs
• Enhance the policy and economic space for
future development

12. International trade context
• The WTO Uruguay Round and extension of
WTO mandate (services, IPRs, investment)
• Doha negotiations
• WTO accession
• The plethora of FTAs
• Pacific Economic Partnership Agreements
(EPAs)
• Agricultural subsidies and protectionism
during economic crisis
• Barriers to exports from the Pacfiic

13. Trade Negotiations in the Pacific
The Pacific faces a huge agenda of trade negotiations, including:
• WTO negotiations affecting members (PNG, Fiji, Solomons, Tonga)
• Complex negotiations for WTO entry (Vanuatu, Samoa)
• PICTA (Pacific Island Countries Trade Agreement) negotiations on services
and extension to other countries
• EPA (Economic Partnership Agreement) being negotiated between the EU
and Pacific Island Countries
• PACER (Pacific Agreement on Closer Economic Relations) with NZ and
Australia who are mounting pressure for negotiations to start
• A push for economic integration in the Pacific Plan, including “a
comprehensive framework for trade and economic cooperation” including
Australia and New Zealand
The extent and timeframes of the negotiations are beyond the capacity of
Pacific countries to negotiate effectively
There has been little research of potential impacts, particularly social, cultural
and environmental impacts, or analysis of alternatives

15. PACER - background
Successor agreement to SPARTECA which came into
force in 1980 allowing duty free access for PIC exports
• with restrictive rules of origin
• consultations are underway on possible reform
PACER came into force October 2002, includes: Australia,
Cooks, Fiji, Kiribati, Nauru, NZ, Niue, PNG, Samoa,
Solomons and Tonga
• RMI, Palau, Tuvalu, and Vanuatu have signed but not
ratified
• FSM have not signed
Includes a trade facilitation programme currently underway
Covers goods only, but A/NZ want services, investment
and other aspects as well

16. PACER – possible costs
• Loss of government revenue, especially for Samoa,
Vanuatu, Tonga & Kiribati
• Regressive effect from indirect taxes
• Increased competition for local producers from imports
from Australia and NZ
• Few alternatives for workers and business to move to a
more competitive sector
• A/NZ companies with manufacturing in the Pacific may go
home and export instead – eg. breweries
• Increased dependence on imported food (often of low
quality) raising questions of health and food security
• Restrictions on Pacific governments being able to nurture
new enterprises and industries
• Dangers from services, investment, intellectual property
rights, procurement, etc.

17. Impacts:
Loss of government revenue
The IMF has undertaken a study of the impact of trade
liberalisation on government revenues and found that the
value added or consumption taxes in poorer countries
raised only 30% of the amount of tax lost from tariffs
These tax reforms put more of the burden on the poor
The trade agreements under negotiation will drastically
reduce tariffs, and will not allow governments to raise
them in future, even if there is a financial crisis
This will be a major problem for many PICs that derive over
half their revenue from tariffs
This is likely to result in severe cuts to essential services
including health care, education, water and sanitation

18. Revenue loss as a proportion of
government revenue
PICTA EPA PACER US MFN Total
PNG 0 0 2 0 2
Fiji 0 0 3 0 3
Samoa 1 0 12 3 18
Vanuatu 2 1 18 0 22
Solomons 1 0 4 0 6
FSM 0 0 1 6 8
Cooks 2 0 6 0 8
Tonga 6 0 19 2 27
Palau 0 0 0 4 4
Marshalls 0 0 5 20 25
Kiribati 4 0 15 0 19
Tuvalu 8 0 5 0 14
Niue 0 0 7 0 7
Nauru 0 0 6 0 6
Source: Responding to the Revenue Consequences of Trade Reform in the FICs, PIFS August 2007

19. PACER – possible benefits
• Rules of Origin improvements for exporters
• Labour mobility (eg. NZ seasonal work scheme),
possibly linked to support for training
• Trade-related development cooperation and
funding such as:
- infrastructure funding
- help meeting hygiene standards & customs requirements
- marketing in A/NZ
• Lower prices for imported A/NZ goods for Pacific
consumers
• Increased funding to build PIC capacity to trade

20. Alternatives
The Pacific is faced with many pressures and apparently one right
answer; economic liberalisation
The promises of unregulated globalisation are now discredited
An alternative Pacific economic agenda should start with:
• Practical support for custom and informal economies
• Support for small locally-owned business
• Delivering on people’s rights to essential services such as clean
water, affordable education and adequate health care
• Building up Pacific infrastructure including investing in transport
links, access to markets, education for all and vocational training
• Investing in vocational education, training and managerial skills
• Laws and policies that protect natural resources, cultural traditions
and indigenous knowledge and gain a fair share from their use
• Developing viable economic options for the Pacific, rather than a
naïve faith in opening up the economy
• Putting the onus on the rich countries to play their role in ending
unfair trade rules, climate change and exploitation of the Pacific

21. So what can you do?
Listen to allies in the Pacific
Write to the Government:
• Send in a submission
• Call for support for an independent negotiator
• Include Fiji in negotiations
• Provide support to the Pacific to develop their
own alternatives
• Do an ‘early harvest on RoO and SPS
Buy fair trade and do a Coffee Break
Find out more and get involved
Tell others; that’s how change happens!