Islands Business | June 2008
SOVEREIGNTY OR SOLIDARITY?
Pacific changes tack as Europe wins first round in trade talks
Sovereignty must be partially surrendered if Pacific islands countries are to maintain solidarity in trade negotiations.
Pacific countries who are members of the African, Caribbean and Pacific (PACPS) bloc of states had a rude realisation of this basic and age-old truth in their on-going negotiations with the European Commission (EC) for an economic partnership agreement (EPA).
“The process of regional economic integration through PICTA and PACER, and EPA too, is like travelling along a continuum,” a trade adviser in one of the Pacific member countries of ACP who asked not to be named told ISLANDS BUSINESS.
“At the near end, we can place sovereignty and at the other end, regional solidarity. As we proceed with regional integration along the continuum, regional solidarity becomes strong and sovereignty erodes.
“Regions that have had longer history of economic integration, like the EU, have seen the erosion of sovereignty over time.
“More and more policies are being formulated at the centre in Brussels for the EU (European Union) for example.
“National policy-makers have given up some of their sovereignty to the EU Eurocrats to allow this to happen in the larger interests of the group and the region.
“In the Pacific, we hardly have any integration to write home about. So we are still close to the near end of the continuum where national interests still predominate over the wider regional interests.”
This trade expert believes the Pacific is in that very critical stage where it is beginning to realise that a regional approach is vital for the region’s well-being. The Pacific is setting itself to get there.
“However, there are times when this is seriously tested and some succumb to the pull of sovereignty. It is a bit of a setback.
The way to go
“But I believe that we have invested so much into regionalism and regional integration and there is momentum to still go forward towards this goal, notwithstanding a few lapses along the way.
“If we are to make any sense of the situation that has evolved, we can put it down to a question of time.
“With further experience of integration under our belt, we can expect a lot more decisions to favour regional solidarity. This to me is the way to go in future.”
ISLANDS BUSINESS sought the expert’s view following last March’s meeting in Fiji of trade ministers of Pacific ACP countries which took steps to avoid the disintegration of regional solidarity in trade negotiations.
This happened in Brussels in November last year when Fiji and Papua New Guinea defied the region’s stance and signed an interim EPA with EC’s trade negotiator, Peter Mandelson.
Trade ministers of both countries later complained that Mandelson’s forceful tactics left them with little choice but to sign up.
In typical Pacific islands fashion, the two countries were not chastised at the March meeting. In fact, the other Pacific neighbours seemed to suggest they understood why Fiji and PNG broke ranks.
Instead, the Secretariat of the Pacific Islands Forum was directed to conduct a “detailed national assessment” on the cost and benefit of signing an interim EPA (like Fiji and PNG).
“The meeting recognised the fact that the two PACPS were left with little option but to initial an interim agreement in November 2007,” said the outcome statement of the Pacific trade ministers meeting.
Mandelson and his team of negotiators actually bore the brunt of the Pacific ministers’ wrath.
Their outcome statement expressed “the ministers’ displeasure at the unduly harsh and disrespectful treatment and pressure put upon them by the EC negotiators during the negotiations towards the end of last year”.
That criticism prompted a sternly-worded letter from Mandelson himself who wrote from Brussels on March 27 (2008) demanding an explanation from the Cook Islands’ trade minister, Wilkie Rasmussen.
The Cooks minister had apparently made the same criticism against Mandelson at a joint ACP-EU joint parliamentary assembly session in Brussels in early March.
“According to the wire reports I have seen, you are quoted as telling journalists that you found it particularly difficult to negotiate in the EPA context with me especially because of my insensitivity to the issues you were raising and that you believed I had pursued a harmful strategy of divide and rule,” Mandelson wrote in his letter, a copy of which was also obtained by ISLANDS BUSINESS.
“It may be that you have been misquoted. If that is the case, I wonder whether you might issue a public correction of these remarks.
“If you are quoted correctly, I should register my disappointment with your comments,” added Mandelson.
Rasmussen did provide a response to the former British cabinet minister in a letter dated April 11 (2008) in which he confirmed he did criticise Mandelson’s handling of the EPA negotiations.
But for reasons yet to be explained, the Cook Islands minister suddenly changed tones and appeared sympathetic, even going to the extent of criticising the approach of Pacific government officials who were advising ministers like him.
“You say that those comments were offensive to you and were personal and public attacks on the European Commission as a negotiating partner to the Pacific region,” wrote Rasmussen.
“If they were offensive, personal and public attacks, I humbly apologise for that.” Towards the conclusion of his letter, the minister added: “Putting aside the negative side, I acknowledge, sir, that there has been hard work from you and the European Commission team and indeed I agree with you the Pacific negotiators who were not ministers were somewhat pedantic in their approach.
“The PACP/Forum officials will probably disagree with my assessment but our structure of negotiations were that they were the ones who did the ground work and we as ministers were the people that endorsed or disapproved their recommendation.
“If there is a way for us to have a middle ground and work on good terms from there on, I would like to propose that we meet when I next come to Brussels so that we can establish some parameters of future negotiations and indeed develop some strategies to offer Pacific Islands Trade Ministers about the way forward in trade negotiation.”
Instead of blaming others, it was Mandelson himself who lectured Rasmussen that the Pacific needed to look at itself and its negotiating skills.
He wrote in his letter to Rasmussen: “You may not have got everything you wanted in the negotiation, but that is the nature of a negotiation.
“It is also true that some of the things you sought were simply never going to be achievable either because they were not in the Commission’s gifts to deliver or because they were not consistent with multilateral trade rules.
“But for that I am afraid you need to look to your own negotiators rather than to the EU.”
The trade expert we spoke to agreed with Mandelson, that it was for the Pacific trade ministers to re-look at the mandate they gave their officials.
“They may have been pedantic, but they were reflecting the extent of the mandates that they carry.
“Officials cannot stick their necks out and negotiate beyond their mandates.
“The ministers should have had clear mandates for the negotiators and sufficient flexibilities to anticipate any contingencies in the negotiations.
“A clear mandate given at the right time would have avoided a situation described by the minister.”
Senior economist at the Australian National University and magazine columnist, Dr Satish Chand, did raise the issue of trade negotiations and the importance of having the right information.
“I am not at all surprised by the outcome of the November 2007 meeting in Brussels.
“None of us should be either. Fiji and PNG had the most to lose from a breakdown in negotiations.
“Trade negotiation is a ‘game’, played with full information, with players knowing what is best for them.
“In this case, Fiji and PNG made their call on the grounds of sovereignty. In terms of regional representation, the EC triumphed over PIF (Pacific Islands Forum).
“We need to realise that coalitions are easy to splinter when interests of individual partners are different to those of the collective body.
“The EU negotiators did a better job than their counterparts from PIFS-the splintering of the Pacific is evidence of the above.
“Clearly, the negotiators for the Pacific, as a group, came out second best in this tussle.”
Chand did agree with Minister Rasmussen that trade officials in the region must shoulder some blame for the breakdown in regional solidarity in trade negotiations.
“The ministers’ frustrations and displeasure with the role played by PIFS (Pacific Islands Forum Secretariat) is evidence of the fact that not enough homework was done by our officials/bureaucrats prior to this meeting,” Chand said in a response to questions sent to him by this magazine via electronic mail.
“PIFS should take some responsibility for this. This saga calls for PIFS to better define its role vis-a-vis that of officials from the trade ministries of the individual governments. Otherwise, these same dilemmas will be faced in future negotiations.”
Pacific ministers should not remain blameless either, as the Australian-based academic believes politicians needed to step-up as well.
“Pacific ministers may have been naive, but my experience with them has been that they are often too polite and heavily dependent on their officials,” said Dr Chand.
“Most of our politicians lack the qualifications, tactics-sometimes the officials will rotate in and out of meetings whilst keeping the other party at the table continuously-and stamina to take on negotiators from developed nations. This is often a gruelling experience for our guys. Some from the Pacific islands go for the fun of the trip and then get shocked at these meetings.
Trade negotiations tough game
“I also think that some of our officials are often poorly prepared and sometimes even under-qualified to best represent the interests of their nations.
“Trade negotiations is a tough game and one that demands discipline and dedication, both of which are often in short supply in Pacific Islands’ bureaucracies.”
The good news for Pacific members of the ACP is that there is still a chance to rescue EPA negotiations with Europe.
According to the trade expert that we could not name, islands countries can still produce a good trade deal but provided that from now on, every island negotiates as a bloc with no dissenters entertained.
“It may not be as bad as it seems,” this expert wrote in his electronic mail response to this magazine’s questions.
“Other PACPS can also sign a trade in goods agreement, either the same as that signed by PNG and Fiji or as a variation of the same.
“If for instance the rules of origin prove favourable and a new export trade can be created cost-effectively, then PACPS concerned will want to sign a goods agreement as well. So this unifying factor is still there.
“By agreeing to resume negotiations, it does mean the mandate to negotiate as a group still prevails. So a comprehensive EPA at the end of 2008 is still on the cards.
“And this is indicative of the importance of a regional approach to EPA and the need for regional solidarity. The regional approach is the most viable approach for PACPS if we are to integrate effectively into the global economy-thus our efforts at PICTA, PACER and the Pacific Plan.
“PACPS can only be convincing as a force if we maintain regional solidarity. As individual countries, we are doomed.
“The reality of the situation is that PACPS need to move and negotiate as a region. Any possibility of any bilateral EPA now is perhaps out of the question.”
Trade ministers of Pacific ACP countries had already come to this realisation at its Nadi meeting last March.
In fact, the ministers took the unprecedented decision of seeking to outlaw a repeat of what Fiji and PNG did in Brussels last November.
“The PACP trade ministers agreed to recommend to the PACP leaders to endorse the region continuing to collectively negotiate a comprehensive EPA under the direction of the PACP trade ministers and that a comprehensive EPA should be accepted only when all parties agree,” the meeting’s outcome document stated.
“The EPA must reflect the differing circumstances and economic interests of all PACPs.”
As a move to strengthen regional solidarity, trade ministers also urged greater and continuous dialogue between Pacific islands countries.
Internal negotiation amongst PACPs is important in order to reach common regional positions that are based on national interests, the ministers said.
Their outcome document stated islands nations also need to remember that current EPA negotiations do have implications in other contexts like PACER Plus which is soon to be negotiated with Australia and New Zealand.
What Fiji and PNG did in Brussels late last year has also prompted trade ministers to speed up the search for a Chief Trade Adviser (CTA) to lead PACER Plus negotiations with the two bigger members of the Pacific Islands Forum.
Session six of the trade ministers meeting stated the “need for the region to negotiate PACER Plus collectively as a group rather than individually or sub-regionally as the region stands a better chance of achieving the desired outcomes from the negotiations.
“The experience of the EPA negotiations in Brussels in late 2007 underscored the need to accelerate the appointment and establish the office of the CTA to facilitate preparations for consultations with Australia and New Zealand on PACER Plus arrangements.
“The CTA will be under instructions from FIC trade ministers and will be the sole point of contact for the FICs in negotiations with Australia and New Zealand.”
When the office of CTA was first proposed at the Forum trade ministers meeting in Vanuatu last year, the name that was suggested by many as the best candidate was Fiji’s former foreign minister Kaliopate Tavola, who until he lost his job during the military coup of December 2006, was the lead negotiator among ministers in EPA negotiations with the EC.
But with the Pacific Islands Forum secretary-general Greg Urwin sending in his resignation for medical reasons in early May, there are now speculations that Tavola might be endorsed to take up the secretary-general job.
If this happens, candidates for the CTA position will be thrown wide open. Other names making the rounds now include that of the chief trade adviser with the Pacific Islands Forum Secretariat Dr Roman Grynberg, Solomon Islander Robert Sisilo, who last month completed his term as the Pacific Islands’ Permanent Representative to the Geneva-based World Trade Organisation (WTO) and Vanuatu’s ambassador to the European Union, Roy Mickey Joy.