Pacific Island trade deal diminished without PNG and Fiji and could cause harm, says report

Media Release, May 9, 2018: “The Joint Standing Committee on Treaties Report on the PACER Plus trade deal between Australia New Zealand and nine Pacific Island countries admits that the absence of Papua New Guinea and Fiji ‘significantly diminishes’ the value of the deal,” AFTINET Convener Dr Patricia Ranald said today. “It also acknowledges many of the issues raised by community organisations that could have harmful impacts in vulnerable Pacific Island economies.”

Pacific Island economies already have tariff free access for their exports to Australia, so the main impact of PACER Plus is to reduce tariffs and improve access for Australian and New Zealand exports and investment.

“PNG and Fiji form over 80% of the combined GDP of Pacific Island economies, but both have declined to join. Both have said that the deal offers more benefits to Australia and New Zealand than it does to them. This is significant because these are the only two economies with enough bargaining power to actually refuse the deal. Others may share this view but the deal is tied to the aid budget,” explained Dr Ranald.

“The Report noted the absence of any independent study of economic impacts and repeated previous recommendations that such studies should be conducted for all trade deals.”

“The report also acknowledges the concerns raised by AFTINET, the Public Health Association of Australia and ActionAid about potential negative impacts on small and vulnerable Pacific Island economies. Most are still local farming and fishing economies, with dispersed populations and high transport costs, and are dependent on import tariffs which make up 10 to 20 per cent of government revenue.  The World Bank has said these factors can prevent these economies from developing new industries and employment to offset the impacts of increased import competition. The loss of government revenue could also result in cuts to essential government services in areas like health and education.” said Dr Ranald.

“The Report‘s executive summary reflects these concerns about the impacts on public health, saying  that the combination of the impact of reduced revenue on public health capacity and access to tariff free products   that cause harm has been a significant issue in the inquiry,“ said Dr Ranald. 

“The Report also notes development assistance funds for implementation of the agreement are not additional funds but are coming from the existing aid budget, and concludes that it is not clear how this is likely to provide a greater benefit to Pacific Island countries.”

The report recommends that these funds be used to monitor the revenue, public health, and gender equity impacts of the Agreement.

“Given that the Report says is that the deal could cause considerable harm to vulnerable Pacific Island economies, and that these impacts should be monitored, it is surprising that it still recommends ratification of the deal,” said Dr Ranald.

“At a time when many commentators are concerned about China’s influence in the region, resentment about such a deal could contribute to a reduction in Australia’s and New Zealand’s influence.”