PACER Plus is a proposed trade, development and economic cooperation agreement currently negotiated by the thirteen Pacific Forum Island Countries (FICs) with Australia and New Zealand.
In August 2009, Forum Leaders agreed to the recommendation from the Forum Trade Ministers to commence PACER Plus negotiations forthwith.
Integral to the Trade Ministers’ recommendation to commence PACER Plus negotiations was the agreement to establish of the Office of the Chief Trade Adviser (OCTA). The OCTA provides independent advice and support to the FICs in PACER Plus negotiations with Australia and New Zealand.
Parties to PACER Plus negotiations seek to promote gradual regional integration in a way that supports the economic development of the FICs and takes into account the differences among the parties.
Guiding Principles
The commencement of PACER Plus negotiations has been followed by a series of meetings at the officials and ministerial level. A number of guiding principles have been recognised, agreed or affirmed by the Forum Trade Ministers and Leaders, and these form the basis of PACER Plus negotiations.
At the Forum Trade Ministers’ Meeting held in Apia, Samoa in June 2009, Ministers recognised the importance of deepening regional trade integration as a means to create jobs, enhance private sector growth, raise standards of living and advance the region’s sustainable economic development.
At the same Meeting, Ministers also affirmed that PACER-Plus provides the Pacific region with a significant opportunity to develop a truly innovative trade and economic agreement that takes account of the different stages of development of each nation.
In the 2009 Forum Leaders’ Communiqué, Leaders noted the need for Forum Island Countries to undertake national consultations with all stakeholders and capacity building for the negotiations. This was followed by an agreement by the Ministers at the Special Forum Trade Ministers Meeting in October 2009 that national consultations are essential.
At the 2010 Forum Trade Ministers’ Meeting, Ministers recognised the capacity constraints faced by the FICs when undertaking negotiations and the need for national consultations, recognising these consultations should be an on-going process and should address the individual needs of countries.
At the same meeting, Ministers also discussed the development of a flexible framework that would enable those countries ready to move ahead with negotiations to progress, while allowing other countries more time to prepare.
Common Priority Issues in PACER Plus Negotiations
While Forum Leaders have agreed to the commencement of PACER Plus negotiations in August 2009, the coverage and framework of any eventual agreement have not been decided.
It is up to all stakeholders, including the Forum Island Countries, to pursue their interests to ensure that these are reflected, to a possible extent, in any eventual agreement.
While the coverage and framework of PACER Plus have yet to be agreed, priority areas for negotiations have been identified.
At their Special Meeting held in October 2009, Forum Trade Ministers agreed on the following common priority issues:
- Rules of Origin
- Regional Labour Mobility (beyond Mode 4)
- Development Assistance, focusing on physical infrastructure for trade, trade development and promotion; and
- Trade Facilitation, including Sanitary and Phytosanitary (SPS) Measures, Technical Barriers to Trade (TBT), Standards and Customs Procedures
At the Forum Trade Ministers Meeting in April 2010, Ministers also noted ‘the fundamental importance of shipping, aviation, telecommunications and water infrastructure to increase trade in goods and services between Member Countries’, and agreed that these were priority negotiating issues for PACER Plus.
Pursuing an early harvest on these priority issues may allow for early realisation of benefits of a pro-development new trade regime.
Regional Labour Mobility (Beyond Mode 4)
For many FICs, regional labour mobility (beyond Mode 4) is the key, if not the most important, issue in PACER Plus negotiations.
From many FICs’ perspective, PACER Plus will not lead to mutually beneficial and development enhancing economic integration among Forum members unless it results in greater integration of labour markets in the region.
Australia has recognised the importance of labour mobility, but maintains it is a complex area of negotiations.
Sanitary and Phytosanitary (SPS) Measures and Technical Barriers to Trade (TBT)
A persistent impediment to FICs export growth is the inability to comply with SPS and TBT requirements in overseas markets. FICs have duty free quota free market access to Australia and New Zealand under the South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA) since 1980, which has done little to promote FIC exports to both markets.
PACER Plus provides the FICs with opportunity to address the SPS and TBT challenges they face to increase exports to Australia and New Zealand and other countries.
SPS and TBT are common component of a preferential trade agreement. While the general objectives of the World Trade Organisation (WTO) provisions are not controversial, they may entail significant implementation costs for most FICs, especially the non-WTO members. SPS and TBT provisions that are mere reaffirmation of WTO commitments will fall short of the PACER Plus ambition to promote FICs’ sustainable economic development.
Most FICs do not have the resources or technical capacity to comply with the WTO rules on SPS and TBT.
Negotiations on SPS and TBT provisions under PACER Plus need to be done ‘outside the box’. Provisions that innovatively combine appropriate rules and development assistance could help promote FICs’ exports to Australia, New Zealand and other markets.
Rules of Origin
Rules of Origin (ROO) serve as the eligibility criteria for preferential market access under a trade regime / agreement.
Stringent ROO have been identified as one of the reasons for the relative ineffectiveness of SPARTECA in promoting FICs’ exports to Australia and New Zealand. The FICs’ geographical isolation, limited resources, and small, undeveloped and undiversified production base limit their capacity to meet the required level of value addition to comply with the ROO.
Carefully-designed and effectively-implemented ROO can contribute to the development of value adding industries in the FICs, moving them up the value chains from being raw material / commodity suppliers.
Differences between Forum Members need to be taken into account in designing the ROO, while effective implementation will require capacity development in ROO management and compliance for both the public and the private sector in the FICs.
Customs Procedures
Customs modernisation is desirable and necessary for optimal realisation of benefits from greater regional integration. It is also time and resource-demanding, and maybe impossible for fiscal and capacity-constrained FICs to undertake without assistance from development partners.
An agreement on a set of rules on customs procedures without practical steps on how to assist with customs modernisation is unlikely to facilitate trade. To meet its objective, PACER Plus should be more ambitious. A long-term comprehensive programme of customs modernisation in the FICs that compliments other efforts underway in the region will be desirable.
The design, development and implementation of the reform programme need to be informed by the unique circumstances in each FIC. The programme should contain realistic end points for the FICs as well as the means to get there.
Successful modernisation of customs administrations may result in substantial benefits to exporters from and to the FICs, including Australia and New Zealand exporters. As the potential benefits would be shared, so should the burden of costs of customs reform under PACER Plus.
Development Assistance
The ‘Plus’ in PACER Plus symbolises the aspiration of Parties for it to be more than just a conventional trade agreement, but one which places the sustainable economic development of the FICs at its core.
The Forum Leaders’ vision for PACER Plus is the promotion of the FICs’ sustainable economic development, and that this should be underpinned by capacity building and development assistance.
Development assistance, while implicit in every issue negotiated so far in PACER Plus, has yet to be discussed in detail. There is a standing commitment by Parties that all aspects of PACER Plus are designed in such a way that ensures positive development outcomes for the FICs.
The Forum Island Country Trade Ministers at their Meeting in 2011 reaffirmed the importance of progress on development assistance if the PACER Plus process is to be successfully concluded.
From the perspective of the FICs, development assistance under PACER Plus is not just about additional money, but also about assistance being beneficiary-driven, timely and effectively delivered and implemented.
Assistance must be designed and delivered with recognition of the unique situation in each individual FICs. The need for sustainable capacity building in both the public and the private sector is real and the long term objective should be to reduce aid dependency amongst the FICs.
Infrastructure
Infrastructure is a later addition to the list of common priority issues in PACER Plus negotiations.
From the point of view of the FICs the priority issue of infrastructure should involve the development and enhancement of trade-enabling infrastructure. The FICs see this as a distinct matter from services liberalisation and investment protection.
List of Meetings Relevant to the PACER Plus Negotiations
The following are key meetings where PACER Plus issues were negotiated or discussed:
Apia, Samoa, June 2009
- Forum Trade Ministers’ Meeting, 17-18 June 2009
Cairns, Australia, August 2009
- Pacific Island Forum Leaders’ Meeting, 5-6 August 2009
Brisbane, Australia, October 2009
- Special Forum Trade Officials’ Meeting, 22 October 2009
- Special Forum Trade Ministers’ Meeting 23-24 October 2009
Port Vila, Vanuatu, April 2010
- Forum Island Country Trade Officials’ Meeting on PACER Plus 1, 12-13 April 2010
- PACER Plus Officials Meeting 1, 14-15 April 2010
Pohn Pei, Federated States of Micronesia, April 2010
- Forum Island Country Trade Officials’ Meeting on PACER Plus 2, 26 April 2010
- Forum Trade Officials’ Meeting 2010, 27-28 April 2010
- Forum Island Country Trade Ministers’ Meeting 1, 28 April 2010
- Forum Trade Ministers’ Meeting, 29 April 2010
Port Vila, Vanuatu, August 2010
- Pacific Islands Forum Leaders’ Meeting, 4-5 August 2010
Nuku’alofa, Kingdom of Tonga, September 2010
- Rules of Origin and Customs Procedures Workshop, 1-3 September 2010
Honiara, Solomon Islands, October 2010
- Forum Island Country Trade Officials’ Meeting on PACER Plus 3, 14-15 October 2010
- The First Non State Actors Dialogue on PACER Plus. 18 October 2010
- PPOM 2, 19-20 October 2010
Koror, Republic of Palau, March 2011
- Forum Island Country Trade Officials’ Meeting on PACER Plus 4, 10-11 March 2011
- PACER Plus Officials’ Meeting 3, 14-15 March 2011
Vava’u, Kingdom of Tonga, May 2011
- Forum Island Country Trade Officials’ Meeting on PACER Plus 5, 12-13 May 2011
- Forum Trade Officials’ Meeting, 16 May 2011
- Forum Island Country Trade Ministers’ Meeting 2, 17 May 2011
- Forum Trade Ministers’ Meeting, 18-19 May 2011