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Trade: Aust, NZ push trade agenda in region

Islands Business | February 2009


Purging the Forum Secretariat

Governments in Australia and New Zealand are keen to assure Pacific nations that relations with the region are marked by ‘shared development goals’, but as Maureen Penjueli writes, the islands’ ‘big brothers’ have been pushing an agenda of their own—especially when it comes to negotiating a regional free trade agreement.

In 2004, the Pacific Network on Globalisation (PANG) released an interim report to look at the implications of the Pacific Agreement on Closer Economic Relations (PACER).

PACER is an agreement that paves the way for a free trade agreement between the Forum Islands Countries and Australia and New Zealand (NZ).

That report found disturbing evidence of pressure by Australian and New Zealand officials to push through their free trade agenda in the region.

One New Zealand official quoted in the report confirmed with disarming frankness: “When it comes to trade, there is no ‘special relationship’ with the Pacific”. The implications are clear-when it comes to trade, international trade strategy takes priority over the views of Pacific governments and the needs of their people.

With the recent changing of the guard in both Australia and New Zealand, there was much hope that Pacific Islands Forum member countries would see improved relations with their ‘big brothers’.

Kevin Rudd’s Labor government, in particular, has launched a major public relations exercise since winning office to assure the region that it has Pacific interests at heart (including in the area of trade).

Australian and New Zealand government officials have been quick to assert that a free trade agreement under PACER (called PACER-Plus) is designed to benefit the Pacific-while down-playing potential negative impacts for the islands and benefits to their own countries.

These assurances have a hollow ring to them. Several developments in the past two years indicate Australia and New Zealand are not primarily interested in making PACER-Plus meaningful for the Pacific.

These developments should give pause to Pacific trade ministers, government officials and the wider public, because both countries have pursued aggressive strategies (mainly behind closed doors) to stack the deck in their favour even before negotiations start.

Islands countries-pawns in a power game

Pacific Islands Countries have had a dismal experience negotiating a free trade agreement (an ‘Economic Partnership Agreement’-EPA) with the European Union (EU) in recent years. In those negotiations, the Pacific failed to secure meaningful concessions from the EU, and few countries are interested in signing a new deal. Recognising this, the Forum trade ministers decided that a new Office of the Chief Trade Advisor (CTA) should be established separately from the Pacific Islands Forum Secretariat to help in the negotiations with Australia and New Zealand.

In March 2008, Pacific trade ministers decided the CTA should be “the only point of contact between Australia and New Zealand and the Forum islands countries (FICs) for PACER-Plus” and that “the CTA takes responsibility for the PACER-Plus negotiations with Australia and New Zealand on the basis of the mandates and negotiating instructions from the FIC Trade Ministers”.

However, Australian and New Zealand officials are resisting attempts to have in place, well before negotiations begin, a new Chief Trade Advisor to help organise the region’s negotiating positions-critical, given the diversity of Pacific countries, and national-level capacity issues.

This resistance from Australia and New Zealand officials is both unhelpful and unreasonable. After all, we are talking about negotiations between two very unequal partners.

Instead of supporting the Pacific’s CTA proposal, Australia announced (in April 2008) a “trade fellowship programme” whereby Pacific trade officials travel to Australia to learn how good PACER-Plus could be for the Pacific, and are trained by Australians to negotiate with them.

Australian officials also announced money would be provided at the national level for Forum Islands Countries (FICs) to undertake studies on PACER-a far cry from a regional office that can guide research and establish strong negotiating positions.

At the Forum Trade Ministers’ Meeting in the Cook Islands in July 2008, Pacific trade officials reported bullying tactics, a divide and rule strategy and explicit threats to remove key Forum Secretariat staff. This behaviour was exhibited by both Australian and New Zealand officials, who pushed for the Pacific Trade Ministers to agree to begin negotiations on a wide-ranging free trade agreement during 2009. Officials from several countries put up a fierce resistance to attempts to fast-track PACER-Plus-attempts made by Australia and New Zealand officials and their key Pacific allies, namely Tonga and Nauru, at that meeting.

Australian officials were so disappointed with FIC Trade Ministers’ refusal to fast-track the negotiations that they told Pacific media that Australia would not commit funds to set up the CTA office because “it did not regard the outcomes of the July 2008 Forum Trade Ministers’ Meeting as constituting an adequate commitment to negotiations that will lead them to fund the CTA”.

Having failed to get their way at the Forum Trade Ministers’ Meeting, Australian and New Zealand officials took their battle to the annual Forum Leaders’ meeting in Niue to secure favourable language. During that meeting, Pacific leaders met separately from Australia and New Zealand and issued a press release which stressed the need for “careful preparations by Forum FICs, both individually and collectively, before consultations began with Australia and New Zealand” and for the early appointment of a Chief Trade Advisor to assist FICs in realising their shared objectives.

However, such caution about entering PACER-Plus negotiations with Australia and New Zealand was not reflected in the outcomes document of the Niue meeting-where Australia and New Zealand leaders were present.

This reflects the position of Australia and New Zealand as major donors in the region, and the importance that Pacific leaders place on maintaining good relations with them. It is not the ‘Pacific Way’ to confront such partners directly. The Niue meeting indicated that Forum Leaders would direct trade officials to “formulate a detailed roadmap on PACER-Plus, with the view to Leaders agreeing at the 2009 Forum to the commencement of the negotiations”. This is an outcome Australian officials are happy with, especially as Canberra will host the 2009 Forum Leaders’ meeting.

Interventions at the Forum Secretariat

Perhaps, the most damaging aspect of recent Australian and New Zealand interventions, is a blatant attempt to undermine technical advisors and senior management positions in the Pacific Islands Forum Secretariat (PIFS).

At the Niue Leaders’ meeting, Australian and New Zealand officials openly advocated for either an Australian or a New Zealand national to be appointed as a permanent Deputy Secretary-General (DSG) of the Forum.

Many regional commentators have commented on the increasing influence of Australia and New Zealand in the Forum over recent years and in particular in redefining of Pacific priorities.
USP academic Sandra Tarte suggests that the ownership of the Forum is increasingly at risk.

She writes that this “sense of ownership has been eroded in recent years as economic, political and security initiatives of the Forum seem to be increasingly driven by Australia and New Zealand (who also control the purse strings)”.

If Australia and New Zealand secure a permanent DSG position, this raises questions about whether PIFS is on the verge of becoming a diluted organisation unable to serve the interest of the Pacific Islands Countries.

In another move that raises questions about the ability of the Forum to advocate on behalf of PICs, it appears that the axe has fallen on one of the region’s most respected trade advisors, Dr Roman Grynberg, whose contract with the Forum is being conveniently not extended. Those that follow international trade negotiations will know Dr. Grynberg is not a popular figure amongst trade officials from developed countries, who often see him as a key stumbling block for advancing their trade priorities.

In 2003, The Guardian newspaper highlighted a letter between the New Zealand Ministry of Foreign Affairs and Trade and the British Government colluding to get rid of “unsympathetic” trade officials within the Commonwealth Secretariat.

One such unsympathetic trade official was Dr Grynberg-whose work advocating on behalf of poor developing countries was seen as derailing free trade discussions.

Reasons for his contract not being extended with the Forum Secretariat were based on a performance review that found him to ‘lack leadership’ and not being ‘client focused’. The question that begs to be asked is, which client(s) is unhappy with Dr. Grynberg’s work? Whatever the reasons for his removal, his absence means the PICs have lost an important critical voice prior to going into negotiations for a free trade agreement with the islands’ most important trading partners.

An alternative approach?

The approach taken by Australia and New Zealand to discussions about PACER-Plus during 2008 indicates a strong willingness by those countries to fast-track the process (to ensure negotiations begin at the 2009 Forum Leaders’ Meeting), to derail any effective regional negotiating machinery (by refusing to support the Pacific’s CTA proposal and funding national-level training and research) and to manipulate the Forum Secretariat meetings to secure their priorities. This approach from Australia and New Zealand has been possible partly because Forum processes (such as the Forum Trade Ministers’ Meeting and the Pacific Leaders’ Forum) are often conducted behind closed doors-with very little outside scrutiny from the media or civil society groups.

PACER-Plus negotiations could lead to a free trade agreement that will have radical implications for Pacific Islands economies and societies. Any agreement will have a much smaller impact on Australia and New Zealand. A bad agreement could lead to a closing off of policy options that are used to stimulate development in the islands, increase pressure for privatisation and undermining access to basic services.

Certainly, PACER-Plus will lead to business closures and job losses in Pacific countries-problems that will be exacerbated because many Pacific states are reliant on tariffs to raise much-needed government revenue. It is vitally important for Pacific governments to “get this right”. Being rushed into negotiations without appropriate research on the implications of PACER-Plus and without a strong regional negotiating body monitored by public oversight- could lead to a complete disaster.

Australia and New Zealand are keen to rush ahead with a far reaching free trade agreement partly because their trade officials are adamant that any pain caused by a new FTA will be short-term, and that increased trade as a result of a new deal will help the Pacific to grow. Australian and New Zealand officials are also concerned that any EPA with the EU will offer better market access to European companies in the region.

In June 2007, both Australian and New Zealand governments confirmed this view. The then Australian Trade Minister Warren Truss stated that, “it’s obviously in Australia and New Zealand’s interest that any new deal that the South Pacific countries may do with the European Union doesn’t disadvantage Australian exporters into those countries”.

New Zealand’s [then] Trade Minister Phil Goff noted that a free trade agreement between Australia, New Zealand and the Pacific was necessary to ensure that New Zealand “is not disadvantaged by preferential access to Pacific markets being given to European countries.”

However, the Australian and New Zealand governments don’t have to approach trade relations with the Pacific from such a position of narrow self-interest. If they are really genuine about the region, they could acknowledge the special and different circumstances of the Pacific Islands Countries (PICs), and offer real alternatives to the kind of reciprocal free trade agreement that is being pushed by the EU.

These alternatives could include improvements to the current South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA), with a focus on enabling Pacific Islands Countries and their peoples to access Australian and New Zealand markets to overcome poverty.

Improvements in Rules of Origin requirements, removal of trade barriers (including Australia’s kava ban) and assistance with meeting necessary sanitary and phytosanitary rules in Australia and New Zealand are all initiatives that would expand Pacific export opportunities-without requiring a new FTA.

Pacific Way must now be the ANZ Way?

The late Ratu Sir Kamisese Mara coined the term the ‘Pacific Way’ - a term that reflects a Pacific way of development based on conversation, respect and mutual consensus.

In recent years, Australia and New Zealand have moved from strength to strength in their quest to replace the Pacific Way with their way. It appears that their goal is to impose their ideology, their free trade agenda, their institutions and operatives, their economic interests, their political authority and their strategic influence on the islands of the Pacific.

If the approach taken by Australia and New Zealand to PACER-Plus in 2008 is an indication of things to come, then pressure is now on Pacific leaders to take back the initiative and demand an approach to trade relations that reflects Pacific concerns.

PIC Trade Ministers and their officials, and the Pacific Islands Forum Secretariat Secretary-General Tuiloma Neroni Slade are more than ever faced with the task of stemming the tide of Australia and New Zealand influence.

If they are not able to, we could see the beginning of the demise of the Pacific Way and the reign of the ANZ (Australia, New Zealand) Way.

• Maureen Penjueli is Coordinator of the Pacific Network on Globalisation

 source: Islands Business