PACIFIC ISLANDS REPORT

Pacific Islands Development Program/East-West Center
With Support From Center for Pacific Islands Studies/University of Hawai‘i

By Russell Hunter
APIA, Samoa (Samoa Observer, August 3, 2009) - As the region’s leaders sit together over the next few days in the tourist town of Cairns in Australia’s North Queensland, their agenda will not, as had been supposed, be dominated by Fiji.

For although conditions under and possible responses to that benighted country’s illegal dictatorship will be high on the discussion list, the main focus of the Pacific Islands Forum annual summit of leaders this week will be trade.

Australia and New Zealand broadly supported by our government here in Samoa are keen to move on from the Pacific Agreement on Closer Economic Relations, otherwise known as PACER, to the new (as they see it) improved PACER-Plus proposal which would in time create a regional common market.

That‘s to say it would be a regional market in which goods and services (though not, it seems, labor) could move freely without incurring duties or import levies. As such it’s a fine theory -- so why are so many individuals and organizations so adamantly opposed to it?

In fact most are not opposed to PACER-Plus per se but are quite appalled at what they regard as the unseemly haste in which the forum’s two metropolitan powers want the region to start considering a proposal that has at least the potential to damage their economies.

Here’s how. Most of the island economies are import-driven. Like it or not, that’s the reality. And their governments derive significant income from duties and taxes imposed on those imports. Some of the island governments, Samoa included, stand to lose serious chunks of revenue if, or perhaps more likely when, PACER-Plus becomes a reality. Some estimates put those losses as high as 20 per cent of revenue.

That being so, those governments can replace that lost income through higher domestic taxation, increased exports to Australia and New Zealand or through general economic growth as a result of the free trade regime.

It’s not difficult to see, then, that great care will need to be taken to get the nuts and bolts of any PACER-Plus deal precisely right which is why many of the islands want more time as well as access to expert advice.

PACER-Plus was to have been an agenda item in three years or so, but now Australia and New Zealand want the talks to start now.

Why? Could it be that the dramatic entry of China as aid donor and trading partner in the Pacific region has gone unremarked in Canberra and Wellington? Of course not. Could it be, then, that Australia and New Zealand wish to secure those markets before China or any other "newcomer" can make further inroads?

Or, yet again, could it simply be that the metropolitan powers now see trade as more productive in terms of development than aid? The reason for the PACER-Plus haste is likely to be all of those and more so the island leaders will come under heavy pressure in the coming days to at least start the ball rolling.

The forum operates by consensus, meaning any one dissenter can block the progress of any measure while the smaller island states are expert in extracting concessions from the big brothers in exchange for if not support at least acquiescence. So the chances are that Australia and New Zealand will get their way -- as they usually do.

But returning to the second item on the forum agenda, Samoa is greatly interested in the future status of Fiji within that regional grouping.

How much longer, for example, will the forum leaders be prepared to maintain their secretariat in a suspended rogue state that has thumbed its nose at its neighbors as well as their leaders? And as Fiji becomes ever more isolated the Forum Secretariat will find it ever more difficult to attract the level of expertise it requires. Indeed there are already rumblings, particularly among expatriate staff, that Fiji is no longer a favored location in which to live and raise families.

Samoa, of course, is the most obvious alternative, as our government has not been slow to point out to the regional leaders. We have improved and are improving air links, an educated workforce, a range of ideal locations and a developing infrastructure. Above all, we have stability.

It’s time to be hard-nosed about this. Fiji no longer deserves to host the secretariat with all the benefits it brings. Samoa does – and we shouldn’t hesitate to say so.

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