Aussies move on PACER Plus agreement

Australia's High Commissioner to Fiji James Batley says his country sees PACER Plus as being much more than a free trade agreement than SPARTECA – the South Pacific Regional Trade and Economic Co-operation Agreement.

He says it will pave the way for a regional economic integration process that helps Pacific economies trade more effectively with Australia, New Zealand and international markets.

Speaking at the Fiji Australia Business Council meeting at the Radisson Resorts Fiji, Denarau Island, Batley said Australia believed that greater regional economic integration would provide significant gains for Pacific island economies.

"Our experience – like that of most other nations – shows that full participation in world markets is a powerful driver of domestic economic growth," he said.

"International economic events, including high oil and fuel prices over the past year and the recent global financial crisis and its damaging flow-on effects do not change that assessment.

"If anything, they underline the urgent need for Pacific economies to develop greater flexibility and greater resilience.

"Although some may argue that the lack of economic integration provides insulation from economic downturns elsewhere, this is a very limited advantage. The long-term benefits of stronger integration into larger economic spaces far outweigh any disadvantages.

"At this Forum last year I spoke on the subject of PACER Plus, the vision of a comprehensive free trade agreement in the Pacific region. Since that time we have seen forward movement, although at a pace we might describe as measured."

At their meeting in Niue in August this year, Forum Leaders instructed officials to formulate a detailed road map on PACER Plus, with a view to Leaders agreeing at the 2009 Forum to the commencement of negotiations.

"Two informal meetings of officials have been held during the course of 2008, in Auckland and in Nuku'alofa, and these meetings have helped to promote mutual understanding as we approach the start of the formal phase of negotiations," Batley said.

"Just last month we provided funding to all Pacific Island Countries, including Fiji, to enable them to commission analytic research to help them build an information base to inform their PACER Plus negotiations.

"Some of you will also be aware that we have already consulted informally with members of the private sector on PACER Plus. Such consultations will build in intensity and formality over the coming year."

Batley said Fiji existing economic links with Australia are providing a buffer from the turmoil in international financial markets.

"Recent reports from the OECD and the IMF have noted the Australian economy's strength and resilience.  In September, the OECD reported that the economy had "stood up well" to global financial market turbulence while in October the IMF reported that "the sound macroeconomic framework should permit Australia to weather the global downturn".

"There is no doubt both Australia and Fiji will be affected by the crisis.  But if Australia can minimize the adverse effects, Fiji, whose economy has strong links with Australia's, is well positioned to escape the worst of the crisis.

"We do not accept the view, which is implied in some public commentary on trade in the region, that Pacific economies are doomed to be nothing more than charity cases.

"Yes, Pacific economies can suffer from diseconomies of scale and the tyranny of distance, and yes bad government policies can make it unnecessarily difficult to run a business.

"All true.  But to my mind it is patronising to suggest that Pacific Islanders are not sufficiently entrepreneurial or innovative to survive and indeed to prosper on their own terms.

"Of course, Australia fully understands that trade liberalisation on its own is not enough to drive economic development.

"Many developing countries have not been, and are not now, in a position to take full advantage of the potential benefits of trade. This includes some of our Pacific neighbours. That's precisely why trade reform and aid need to work together to promote economic development."

Batley maintains that PACER plus will supersede SPARTECA, which he believes is "old fashioned".

He said they did not have a template/model on PACER plus agreement and it was still very early informal stage of discussions but they hoped something would crystallize in the next year or so.