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As Fiji deals at the political level with issues relating to negotiations on the PACER (Pacific Agreement on Closer Economic Relations) and PACER-Plus, questions have been raised by Fiji’s textile industry on the overall effectiveness of the agreements to actual trade.
And suggestions have been made to push for a review of the South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA) and its subset SPARTECA-TFC.
Textile, Clothing and Footwear Council of Fiji head Kalpesh Solanki said while the PACER and PACER-Plus arrangements were reciprocal in nature, Fiji and the Pacific island nations as a whole did not command a sizeable economy of scale to allow them to really benefit under a reciprocal arrangement with Australia and New Zealand in the same way that bigger nations would through free trade arrangements with the two countries.
“I believe that a reciprocal trade agreement will yield most benefit to all parties involved in the agreement when they have some form of economies of scale for example in terms of population, GDP, GDP per capita, labour force, imports, and exports or any combination of those,” said Solanki.
“The economies of scale in different aspects of the countries in question allow each party to have a comparative advantage over each other and thus the comparative opportunity cost is balanced off or not too great. The end result is of benefit to all,” said Solanki, while speaking on the subject of PACER and PACER Plus at the weekend’s 11th Attorney General’s conference.
“Now I pose a question, does Fiji or the Pacific region have the necessary economies of scale to offset the opportunity cost of removing its trade barriers? In my research, I couldn’t find the answer to that. But I think it is important that we assess this seriously.”
“As the comparison (of larger economies doing free trade with Australia and New Zealand) shows, even if we combine all Pacific nations’ GDP, population, imports, exports, etc respectively, we are still very small in comparison to our partnering nations – Australia and New Zealand.”
“In contrast to the reciprocity of PACER & PACER Plus, I think it would be good to review the non-reciprocal trade agreement in place, that is, South Pacific Regional Trade and Economic Co-operation Agreement (SPARTECA) and its subset, SPARTECA-TCF Scheme,” Solanki added.
He said SPARTECA, which came into effect in 1981, offered duty free and unrestricted concessional access into Australia and New Zealand and which would be ideal for a small country like Fiji to use, although some efforts should be made to lobby for modifications to make it more realistic.
Modifications should be made, he said, in relation to margin of preference – where the two countries should be asked to stall their proposed reduction in import duties, and for the rules of origin to be simplified for administrative purposes.
He said while PACER and PACER-Plus were likely to be implemented six to eight years from now, and upon implementation would erode Fiji’s competitive advantage, SPARTECA offered a wider window of opportunity that Fiji’s trade negotiators should try to strengthen in order to maintain Fiji’s margin of preference.
