Understanding Fiji’s trade agreements
Fiji Times | Tuesday, September 19, 2006
Understanding Fiji’s trade agreements
Verenaisi Raicola
Most of us are usually kept in the dark when it comes to assessing the impact of trade agreements signed by our government.
But this should not be the trend because whatever agreements are signed by our leaders eventually affect us all.
All governments that come into power enter trade agreements with other countries.
The agreements describe how goods are traded between the countries and focus on reducing tariffs and gaining better access to markets.
Trade agreements can be bilateral, between several countries or global.
The process of negotiations leading to the removal of the trade barriers by individual governments is referred to as trade liberalisation, globalisation or deregulation.
Social Welfare chief executive Emele Duituturaga said trade agreements had a direct effect on employment.
She said it was important to study how trade agreements in Fiji and the Pacific affected people’s lives.
"There would be a direct effect on employment and we need to make sure that when the Government is signing agreements on trade with other countries, we know what we are signing ourselves into,’’ Ms Duituturaga said.
"Does opening up trade with other countries mean we will lower our prices?
"This also has an impact on the kinds of food people are eating."
Ms Duituturaga said with cheaper foods from China and elsewhere available in the markets, people no longer depended on fresh vegetables and food crops for their diets.
"This impacts the way we produce in the agriculture sector,’’ she said.
"So before our governments sign the agreements, people need to know how the country would be affected and identify how we cope when affected."
Ms Duituturaga said the lack of knowledge on agreements had a negative impact on society.
"Today we are experiencing the impact on the rise in costs of food items and fuel and the lack of knowledge does not help people prepare themselves for it.
"In 2000 for example, when there was a black out on imports of food, people scrambled around because many of us depended on such products.
"So the question is how do we balance the need to increase our exports and trade, and at the same time ensure we have sustainable livelihoods and we are eating healthy foods?"
Ms Duituturaga said trade requires specifications and farmers needed to be educated with the latest technology.
"If people are producing for international markets then farmers need to expose themselves to training and the latest techniques to compete with other countries," she said.
At the opening of a seminar on the social impact assessment of trade agreements yesterday, Women Minister George Shiu Raj said it was important to understand developments taking place around us, not only in our homes and communities but at national and international levels.
He said while studies have been conducted on the impact of free trade agreements on communities like Fiji, monitoring changes was an area that needed more assessment.
"I am concerned about gender and poverty impacts on our communities as a result of globalisation and if we are not careful there can be increasing gender inequality and rise in poverty levels,’’ Mr Shiu Raj said.
"So we must be vigilant and equip ourselves to deal with these concerns."
The Pacific Island Countries Trade Agreement is a free agreement among forum island countries.
It provides for the progressive phasing out of tariffs on trade.
This means that tariffs on developing forum island countries like Fiji would be reduced to zero by 2010.
PICTA covers trade in goods between the countries.
It excludes trade in services, or labour movement.
The only exception however is trade in alcohol or tobacco products.
These products are exempted for at least two years before a decision is made on its permanent status because tariffs on "sin" products are important for revenue.
PICTA contains the "rules of origin" that require goods to contain at least 40 per cent local content before it is imported to countries party to the agreement duty free.
One of the stated objectives of PICTA is the creation of a single market for forum island countries.
This means extending the coverage of PICTA to include trade in services and the movement of capital and labour.
All countries bound by PICTA must allow goods from other PICTA members to enter without restriction, by a certain date.
That means no tariffs, no quotas limiting the amount of goods that can be imported and no import licences that require permission to import goods.
All forum members including Australia and New Zealand negotiated the Pacific Agreement on Closer Economic Relations alongside PICTA.
PACER requires forum island countries to negotiate a trade liberalisation and economic integration arrangement with Australia and New Zealand no later than eight years after PICTA came into force in 2003.
A people’s guide to PACER by Professor Jane Kelsey and commissioned by the Pacific Network on Globalisation, stated that all member countries were supposed to work together to promote "free trade" especially at the World Trade Organisation.
Australia and New Zealand promised to fund a regional trade facilitation program for the islands.
The parties to PACER must begin to negotiate a free trade and regional economic integration arrangement by 2011 at the latest.
Professor Kelsey said officially PACER was the main umbrella agreement and PICTA was the lesser one.
"That’s not how most of the island governments see it.
"They wanted a PICTA style arrangement among themselves but Australia and New Zealand insisted on being included.
She said rather than becoming full members of PICTA, Australia and NZ had to settle for a promise of negotiations by 2011.
Professor Kelsey said the obligations under PACER were moving very slowly.
The most controversial aspect is the promise that Australia and NZ would help fund a regional trade facilitation program which means streamlining and upgrading customs, bio-security and quarantine type processes.
"This was an incentive for the islands to accept PACER.
"But Australia and New Zealand only said they would help fund such a program with other unspecified donors, and gave no guarantee that this would involve new money rather than funds from some other Pacific project," she said.
In 2003 Australia and NZ rejected the first funding proposal and told the island trade ministers to cut it back.
Forum Secretariat Trade Policy Officer Gail Olsson said ultimately the goal of the PICTA and PACER was to promote economic development of parties to the agreements that in turn would contribute to the reduction of poverty.
"That being said, how reciprocal free trade arrangements between Fiji and Australia and New Zealand would affect the ordinary person in Fiji would depend on the detailed arrangements themselves.
"Those are to be determined and much work remains to be done before negotiations actually proceed.
"It is worth noting in that regard that in 2005, forum trade ministers agreed there was a need to move beyond the South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA) "towards a more comprehensive framework for trade and economic cooperation between Australia, New Zealand and the FICs, as provided for under PACER, to foster economic growth, investment and employment in the Pacific region". As a first step, the ministers directed the Pacific Islands Forum Secretariat, in close consultation with forum members to:
"(a) Commission a joint study to investigate the potential impacts of a move towards a comprehensive framework for trade and economic cooperation between Australia, New Zealand and the FICs; and
"(b) Undertake a gap analysis of FIC needs in respect of capacity building, trade promotion and structural reform taking into account the study recently completed on fiscal reform and any conclusions reached by FEMM 2005 on this study". Interested consultants are invited to apply to carry out the joint study and gap analysis (further information is available on the Forum Secretariat’s website www.forumsec.org).
Fiji and other forum members will consider the results of the study and gap analysis in the first half of 2007. It is expected that all FIC governments will be consulting with interested stakeholders in relation to those studies.
Benefits that usually arise from the conclusion of mutually beneficial free trade arrangements in-clude a wider selection of products to choose from at a cheaper price, an expanded international market for goods produced in the country, higher employment, greater investment and improved efficiency of local producers.
At the same time, FICs will be concerned to ensure that negative economic, social and environmental impacts of any free trade arrangements are significantly less than the overall net benefits of such arrangements and work will be carried out at the regional and national levels to assist the FICs in this regard.
