13 December 2002
Reassess free trade agreements
By Stanley Simpson*
Recent experience with the implementation the Melanesian Spearhead Group
(MSG) Free Trade Area Agreement effectively illustrates how Pacific
sign regional and international agreements without adequate consultation
assessment at national and local level.
It also serves as warning and food for thought to those intending to
to the Pacific Island Countries Trade Agreement (PICTA), the Pacific
Countries Agreement on Closer Economic Relations (PACER), and for the
Pacific member countries of the World Trade Organisation participating
negotiations for a new round of trade deals.
Do we really know what we are getting ourselves into? Have we fully
What we mostly hear of these agreements from officials are the bountiful
benefits, very rarely do they express the negative effects or costs.
often, the negative effects take up a single paragraph or sentence, and
dismissed with the assertion that the Pacific has no choice but to
The problems associated with the MSG free trade agreement can be seen in
either positive or negative light. They can at the very least, trigger a
much needed reassessment of national and regional development goals by
highlighting the inequalities in the free trading system, and the
the "one-size fits all" model which is assumed to work everywhere no
what differences exist. They illustrate that the belief everyone will be
able to compete on an equal footing with each other, is absurd, and
into question the suitability and viability of the "one regional market
six million people" as envisaged by the Forum Secretariat.
For who will win, and who will lose?
The Forum knows very well who will win under PICTA. At a trade union
in September, the Forum Secretariat trade policy adviser Professor David
Forsyth labeled Fiji the ’big boy’ in trading within the region, saying
will not suffer any social impact as PICTA would affect only 4 per cent
Fiji’s trade (he did not highlight however that the loss of tariff
would likely see the increase of VAT in Fiji, a reality that has come to
pass and which has severe social impacts).
But for trade, it should be good for ’big boy’ Fiji.
But what then of the ’small boys’? Are they expected to let the ’big boy’
take over their markets while they struggle to penetrate the Fiji market.
Should they just tolerate it, grit their teeth and look for something
to trade in?
The MSG also highlights that little or no research was made on what the
negative costs will be and how they should be addressed. Was a
socio-economic impact assessment ever done, and if so, by whom?
In November, Vanuatu announced that it would re-impose 40 per cent
tariffs on 6 products under the MSG agreement to protect local
manufacturers. Fiji and PNG goods were seen to be flooding the Vanuatu
In April this year, the Solomon Islands announced that it would seek
temporary suspension of its membership under the MSG as part of the
government’s plan to revive the country’s economy by promoting and
protecting the local manufacturing industry. It was explained that the
did not help to improve the country’s economy because of the imbalance
trade between the members of the group citing SBD$70,000 a year in
compared to SBD$28 million worth of imports.
In September it was reported that Fiji and Papua New Guinea were
ways to end differences threatening PNG’s intended canned beef exports
Fiji, which did not comply with Fiji’s import requirements, although
canned meat exports to PNG was increasing. It was proposed that, if the
problem could not be sorted out, canned meat should be dropped from the
Last week, Goodman Fielder International Fiji Limited, distributors of
Tuckers ice cream, attacked the MSG trade agreement saying it was not as
beneficial as expected. Vanuatu’s re-imposition of tariffs meant Tuckers
ice-cream would not be able to effectively compete there.
So where do we go from here? Stubbornly insist that we have no choice
the new world trading system? Or must we reassess the whole process?
There is a potential these trade agreements could set Pacific countries
against each other. In a critique of PICTA done in February 2002, the
Pacific Network on Globalisation (PANG) predicted: "Far from furthering
co-operation among Pacific Island states, PICTA will encourage
between them and could provoke unanticipated discord and tension among
and their peoples. This could undermine the regional unity that has been
hallmark of successful negotiations around shared resources like
Fiji appears to be the main beneficiary of the MSG and PICTA but when
comes into force ushering in free trade with Australia and New Zealand,
may not be so privileged. Forsyth himself admitted that while Fiji was a
’big boy’ within the region, it was a ’small boy’ when dealing with
Australia and New Zealand. In his own words, PACER may involve "major
’adjustment’ for Fiji." Imagine then the scale of ’adjustment’ for
like Vanuatu and the Solomons, let alone the smaller countries like
The writing is on the wall that we must reassess these free trade area
agreements. We cannot accept that there are no alternatives in the
economic system. To accept the current orthodoxy of free market
fundamentalism without question is not only defeatist, it means ignoring
abandoning responsibility for the economic, social and political
It would make a mockery of our democracies, and rob us of the
innovate, think freely and protect ourselves.
The need to trade is appreciated, but we must push for fair trade,
than one-size for all free trade.
* Stanley Simpson is the Coordinator of the Pacific Network on
(PANG). The views expressed here are his, and not necessarily those of