Pacific island countries set to block regional trade deal

Agence France Presse | 5 August 2009

Pacific island countries set to block regional trade deal

Opponents say island countries’ local industries would be destroyed by cheaper imports and govts would lose much of their revenue if tariffs and duties were lifted on Aussie, NZ goods

CAIRNS, Australia: Pacific island countries are likely to block a proposal by Australia and New Zealand to launch negotiations for a new regional trade deal at a summit in Australia, an island nation leader said Tuesday.

Host Australia had been hoping to launch negotiations for the free trade and development agreement, known as PACER Plus, as the centerpiece of the Pacific Islands Forum summit Wednesday and Thursday.

However, after 13 island nations met on Tuesday, meeting chairman Toke Talagi, the premier of Niue, said they weren’t yet ready for negotiations.

Asked by journalists after the meeting whether PACER Plus would be launched at the summit in Cairns, Australia, Talagi said: “No, I don’t believe so, but that’s a decision the leaders will have to take at the retreat (on Thursday).

“I think we agreed this afternoon that there still needs to be a bit of work to do before we can launch anything,” Talagi said.

“Further study needs to be conducted to ensure we get a good product to launch rather than launching it for the sake of launching it.” He added there had been no discussion on the timing of the negotiations.

Decisions in the 16-member forum - 14 Pacific islands plus Australia and New Zealand - are made by consensus, so any opposition could scuttle hopes to launch the new deal.

The Pacific Area Closer Economic Relations, or PACER, plans have long been controversial, because of arguments that free trade would heavily favor Australia and New Zealand, which already have a heavy trade imbalance in their favour.

Opponents say the island countries’ local industries would be destroyed by cheaper imports, and island governments would lose much of their revenue if tariffs and duties were lifted on Australian and New Zealand goods. The 14 island nations include some of the smallest and poorest countries in the world.

Australia and New Zealand say that the deal would increase trade in the region and that it would include development assistance to ensure it worked in the island nations’ favour.

There has also been controversy because one of the largest island economies, Fiji, hasn’t been able to take part in preliminary talks following its suspension from the forum in May, after the military regime broke promises to hold elections early this year.

Four Melanesian leaders - including Fiji’s - who met last month said any PACER Plus agreement struck without Fiji’s involvement would be invalid.

Australia and New Zealand said ways could be found to include Fiji without breaching the suspension of the regime from forum meetings.

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source: AFP