PACER Plus nearing conclusion says Chief Trade Adviser

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Edwini Kessie

Bogged down by the thorny issues of labour mobility and development, chief trade adviser in the Pacific Islands Dr Edwin Kessie is hopeful still for a resolution of the new free trade agreement called PACER Plus between the smaller islands of the Pacific Islands Forum and its two larger members of Australia and New Zealand.
Speaking from Koror, Palau where he is attending the 45th Pacific Islands Forum Leaders Summit, Dr Kessie said they should conclude negotiations by the end of this year, or early 2015. He said agreements have been reached in all but two items of PACER Plus, and he’s optimistic that “landing zones” or compromises could be reached by both parties on the two outstanding matters.

“We are making good progress in the negotiations. Thus far, we have concluded negotiations on sanitary and phytosanitary measures, technical barriers to trade and customs procedures. We have also made good progress in the negotiations on trade in services and investment,” said Dr Kessie.
We are currently exploring possible landing zones on labour mobility and development assistance, two issues of utmost importance to the Forum Island Countries (FICs). Should the parties exercise flexibility and engage constructively then, I believe, it should be possible for the negotiations on the legal texts to be concluded by the end of this year or early next year,” the former World Trade Organisation trade negotiator added.
Dr Kessie, whose Office of the Chief Trade Adviser is in Port Vila, Vanuatu, also took questions on other matters relating to PACER Plus negotiations. Below is a transcript of the interview.

Islands Business: Why has progress been so slow on labour mobility and development assistance?

Dr Kessie: Whether in the regional or multilateral context, these are generally very difficult issues. Whereas there is some connection between these two issues and trade, several countries believe that there should be negotiated elsewhere. PACER Plus is no different; the Parties have very divergent views. What is encouraging is that they are engaging intensively to identify possible landing zones. On labour mobility, the FICs have two basic demands, namely the increase in the quota levels under Australia’s Seasonal Worker Programme and New Zealand’s Recognised Seasonal Employer programme, and the extension of these schemes to new occupational areas where the FICs can fill the gaps in the labour markets of Australia and New Zealand. Recently, New Zealand announced an increase of the quota level from 8000 to 9000 and Australia will be undertaking a review with a view to making substantive changes to the SWP, which under the quota level is set to be increased to around 4000 in 2015. Regarding development assistance, the FICs would like Australia and New Zealand to provide them with assistance to not only implement their PACER Plus obligations, but also to address the supply-side constraints which have militated against their efforts to increase and diversify their trade. Both Australia and New Zealand have indicated that they would be increasing their spending on Aid for Trade, so it should be possible for the Parties to reach a compromise on this issue. Australia and New Zealand are aware of the fundamental importance of these two issues to the FICs and are committed to engaging the FICs to find appropriate landing zones.

Islands Business: There is the view among the NGO community that FICs will not benefit from PACER Plus and that the agreement will only serve the interests of big multinational companies in Australia and New Zealand. Do you see any merit in these views?

Dr Kessie: On balance, I believe that the FICs stand to gain more than lose from PACER Plus. A PACER Plus Agreement will
help the FICs to put in place a coherent trade and investment policy framework that should create the necessary conditions for trade and investment to flourish and for the long term economic development of their countries. The Agreement should enable them to push through reforms that would provide a pathway for the sustainable growth and development of their economies. It should be borne in mind that a trade agreement in and of itself does not guarantee economic growth. Very much depends on the domestic policies implemented by individual countries to take advantage of the trade agreement. As previously stated, the FICs would derive significant benefits from agreements on labour mobility and development assistance. Given the dominance of the services sector in the FICs, agreements on trade in services and investment should facilitate the expansion of this sector to fuel growth of their economies. Agreements on rules of origin, sanitary and phytosanitary measures, technical barriers to trade and customs procedures would reduce barriers to trade and enhance security and predictability of market access. It is only in Trade in Goods that there could be some possible adverse effects in terms of revenue losses for the FICs. The negotiations on trade in goods are in the early stages and measures would be taken to mitigate against any adverse impact tariff reductions would have on government revenue and the competitiveness of infant industries.

Islands Business: How credible are reports that the FICs will lose control over their land and that they will have to privatise essential public services such as health and education?

Dr Kessie: There is no substance to such claims. Although the negotiations on trade in services and investment are on going, there is already agreement among the parties on the right of countries to regulate these two areas, including implementing prudential measures to safeguard the integrity of their financial systems. Issues such as land ownership would be left entirely at the discretion of countries. Likewise, it is up to each and every country to decide in which areas or sectors that it would like to undertake commitments.

Islands Business: There is the perception that the negotiations are being conducted in secrecy and against the will of the FICs?

Dr Kessie: There is also no merit in this statement. The FICs are active participants in the negotiations. They articulate and strongly defend their interests. They recognise that trade is an engine of economic growth and sustainable development and would like also to derive significant benefits from international trade as has been done by developing countries in other parts of the world, including Asia and Latin America. While the negotiations are restricted to government officials as is the case in all trade negotiations, every effort is made to brief representatives of the private sector and non-governmental organisations on developments in the negotiations through national consultations on PACER Plus and also the organisation of dedicated workshops where all the negotiating issues are thoroughly discussed and analysed. From that perspective, the PACER Plus Parties are very progressive in terms of sharing relevant information with stakeholders.

Islands Business: When will the next round of negotiations take place and what are the expected outcomes?

Dr Kessie: The eighth inter-sessional meeting is expected to take place in Auckland in the week of 29 September. It is the expectation of the Parties to close as much as possible the gaps in the draft Chapters on Rules of Origin, Trade in Services and Investment and make progress on development assistance, labour mobility and Trade in Goods.