MAKING WAVES

: OPPORTUNITIES FOR RECLAIMING DEVELOPMENT IN THE PACIFIC INFORMING CIVIL SOCIETY RESPONSES TO THE FREE TRADE AGENDA:

Abstract

The Pacific Island Countries currently face concerted pressure (from donor countries and international financial institutions) to ‘integrate into the global economy’ through implementing new free trade agreements.

The model of extensive trade liberalisation is currently being implemented through interlocking stages – bilaterally through the Pacific Island Countries Trade Agreement (PICTA), negotiations for a new Economic Partnership Agreement (EPA) with the EU, and with Australia and NZ under the Pacific Agreement on Closer Economic Relations (PACER), and multilaterally through the World Trade Organisation (WTO).

Free traders argue that the Pacific will benefit from cheaper imports, increased investment in the region and improvements in efficiency of Pacific business and service suppliers. However, it is widely acknowledged that trade liberalisation will have very real costs for societies and economies – in terms of lost government revenue, business closures and job losses, and undermined access to essential services.

Governments will also lose important ‘policy space’ that can be used to stimulate development, and regulate trade and investment in the social interest.

Concerns have been raised by civil society organisations, church groups and trade unions that free trade will hurt workers and communities in the Pacific, and that the ‘benefits’ of trade liberalisation are far from proven.

This paper provides an up-to-date analysis of the FTA negotiations currently facing the region, and potential implications for the region if our governments choose to sign new FTAs. It also offers a critical analysis of the approach Pacific governments have taken to engaging new trade
negotiations, and considers the role of trade unions and civil society in engaging the trade talks.

This paper is intended to give Pacific civil society organisations (CSOs) the critical tools required to understand the push towards free trade in the Pacific, and to engage the process more effectively. National, regional and international government processes for negotiating new FTAs are outlined, aiming to offer CSOs a picture of where, when and how they might better intervene in the trade decision making process. Finally, this paper offers some suggestions for coordinated CSO policy in relation to the push towards free trade in the Pacific.

This report has been prepared by Maureen Penjueli, Coordinator, the Pacific Network on Globalisation (PANG) and Wesley Morgan, Communications Officer, PANG. This paper has been prepared in collaboration with Nick Braxton, Advocacy and Research Officer, Oxfam New Zealand, and Professor Jane Kelsey, Professor of Law, Auckland University.


Acknowledgements

The Pacific Network on Globalisation (PANG) plays the role of the Pacific regional “peoples’ watchdog on trade issues”. Established in 2000 by regional NGOs concerned that Pacific civil society was being left out of the debate on trade liberalisati on and that the free-trade agenda lacked a focus on key goals of human development and poverty reduction.

PANG receives support from a number of organisations and individuals, who deserve a special mention for their help in producing this report.

Without continuing support from the Canadian ecumenical organisation, KAIROS: Canadian Ecumenical Justice Initiatives, PANG would not be able to continue to carry out its important work. KAIROS program coordinator Connie Sorio in particular has demonstrated a much-appreciated faith in the ability of Pacific civil society to engage trade discussions in the region.

In producing this report PANG worked closely with Professor Jane Kelsey, Professor of Law at Auckland University. Professor Kelsey has been a tireless supporter of the campaign for fair trade in the Pacific (and across the globe). Her technical and legal expertise has been invaluable for producing research at PANG. Professor Kelsey has previously completed two major reports on free trade in the Pacific: A People’s Guide to the Pacific’s Economic Partnership Agreement (Negotiations between the Pacific Islands and the European Union pursuant to the Cotonou Agreement 2000), and; A People’s Guide to PACER (The implications for the Pacific Islands of the Pacific Agreement on Closer Economic Relations (PACER).

Nick Braxton, Advocacy and Research Officer at Oxfam New Zealand also contributed to
the research and writing of this report. Nick completed the section entitled; A poor precedent for the region? Implications of the EU-Caribbean EPA, and provided support throughout the review phases of producing the Making Waves report. Oxfam NZ continues to be a staunch ally of the Pacific in campaigns for fair trade in the region.

An earlier version of this report was produced for a regional trade union conference on free trade in the Pacific, hosted by the International Labour Organisation. The ILO/ACTRAV Pacific Trade Union Seminar on Free Trade, Decent Work, and Social Development in the Pacific was held in Nadi, Fiji, from June 24-26, 2008. PANG would like to thank Mishihiro Ishibashi, Specialist on Workers’ Activities, ILO sub-regional officer for Southeast Asia and the Pacific, for his enthusiastic support during that seminar. PANG would also like to thank Rajeshwar Singh, General Secretary of the Fiji Public Service Association for nominating PANG staff to work as resource people for the ILO seminar.

In solidarity,
Maureen Penjueli
PANG Coordinator
August 2008

Full Report Here

1. Introduction: The push for free trade

For much of the past decade the Pacific Island Countries (PICs) have faced pressure fromdeveloped country partners, international financial institutions and aid donors to move towards trade liberalisation through new free trade agreements (FTAs) and through joining the World Trade Organisation (WTO).

Free trade agreements involving the region include the Pacific Island Countries Trade Agreement (PICTA), the Economic Partnership Agreement (EPA) with the European Union, and the extension of the Pacific Agreement on Closer Economic Relations (PACER) with Australia and NZ to include deeper “economic integration”.

The move towards free trade in the Pacific is driven largely by the interests of business (exporters, service suppliers and potential new investors) based in the Pacific’s developed-country ‘partners’. Businesses in Australia and NZ in particular want to see tariffs reduced on their exports to the Pacific, and changes to laws in the region to allow multinational corporations to establish new enterprises and invest (and remove profits) with reduced obligations to the countries in which they invest.

Alongside these direct commercial interests in trade liberalisation in the Pacific, policy makers from Australia, NZ and the EU rely heavily on neoliberal arguments that trade liberalisation will lead to improvements in industry efficiency, through increased competition and a renewed focus on areas of ‘comparative advantage’. Proponents of new FTAs for the region also argue that consumers will benefit from cheaper imports, and that some export industries will benefit from cheaper inputs to their production lines.

(See Inset Box 1: What ‘free trade’ means for the Pacific for discussion on the arguments for free trade in the Pacific). Other more general arguments are made that new FTAs will help to improve regional cooperation in the Pacific, and will send a ‘positive signal’ that will help address the ‘economic and political marginalisation’ of the region.

In the decades following decolonisation in the Pacific, relations with former colonial powers in Europe, Australia and NZ were marked to a degree by development cooperation and trade preferences (preferential access to markets for Pacific exports).

These relations were cemented under agreements like the South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA) with Australia and NZ, and the Lomé Agreement with the European Union.

During the 1990s, alongside the widespread adoption of neoliberal market policies in the developed world (and among donor organisations and international financial institutions), the rise of a multilateral trade liberalisation instrument (in the WTO), and a proliferation of bilateral free trade deals, this emphasis on development cooperation and trade preferences has been eroded. The rhetoric of development cooperation and special/preferential treatment for smaller developing nations is increasingly being replaced by a hard line ‘everyone must compete on the open market’ policy.

While often conflated with other concepts – like cultural homogenisation, and the spread of new technologies – it is the move towards open and integrated markets that is most often referred to as globalisation. It is important to understand that when Pacific governments are pressured to ‘embrace globalisation,’ this most often refers to pursuing free trade policies and negotiating new FTAs.
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The key question, for Pacific civil society organisations, is whether the free trade deals facing the Pacific will really raise the people’s standards of living, and of work, or will they lower them?

Concerns have been raised by many in the Islands, particularly civil society organisations, trade unions and critical academics, that FTAs will have negative implications for working people in the Pacific. Just some of these concerns are; reductions in government revenue (leading to increased consumption taxes and/or loss of government services), an undermining of access to essential services for poor and rural people through increased pressure for privatisation, a reduction in the ‘policy space’ available to governments to stimulate development, and less access to medicine and education materials through stronger intellectual property rights. It should be noted that Pacific civil society is not alone in being wary of FTAs.

There have been a series of concerns raised by civil society organisations the world over, and
the international trade union movement, and about the employment and development
impacts of the move to free trade.

Civil society organisations in the Pacific are focussed on work that contributes to regional goals of economic growth, sustainable development, good governance and human security – all elements of the Pacific Plan. The challenge of ‘integrating into the global economy’ and expanding trade opportunities is one that has become a preoccupation of Pacific leaders in the past decade.

It is important that Pacific CSOs are a part of the discussion around trade and development in the region. At the moment, the debate is dominated by simplistic assumptions that trade liberalisation will lead to economic growth and development. Pacific CSOs must raise concerns about potential negative impacts of poorly considered trade liberalisation – about the so called ‘adjustment costs’ – to add clarity to the discussion and help Pacific leaders to make realistic assessments of trade policy choices.

However, Pacific CSOs must do more than raise concerns about the FTAs. Pacific civil society can contribute to developing a coherent response to the question “ how can we use international trade to enhance our development?.” Currently, the focus, especially in FTA negotiations, is all too often “how much trade liberalisation can we cope with?”, and in some senses negotiating FTAs has replaced considered trade and development policy in the region.

This is a dead-end approach to development. We know that all of the now-developed countries have used various elements of protection, and support for local industry, to develop to a level where their firms can compete in the global market. This is true for countries in the EU, for developed countries in the region like Australia and NZ, and for the rapidly developing Asian ‘tiger economies’. Even small developing states can use a mix of tariffs, quotas, and investment incentives to govern the market in a way that adds value and stimulates development. Pacific leaders need to retain the ability to make policy choices that will harness trade to the service of development in the region.

To harness the opportunities of international trade, the Pacific needs a renewed focus on addressing real constraints in the region. A focus is needed on building service industry capacity (in tourism for example), supporting niche agricultural and manufacturingproducts, developing new markets (and improving market access) for Pacific exports,
improving management and value-adding of Pacific resources (in areas like mining,
fishing and forestry) and targeting investment at small and medium enterprises.
Renewed commitments are also needed to improving key infrastructure (transport,
electricity, telecommunications etc.) and improving access to health and education
services for Pacific workers.
The FTAs proposed by the EU, and Australia and NZ, will restrict forever the ability of
Pacific governments to favour local firms and service suppliers, or regulate foreign
investment to help stimulate local industry and employment. PICs will lose the ability to
support local businesses to benefit from future opportunities and create local jobs in the
future. For the Pacific, with relatively few developed businesses at present, it is this loss
of policy space that is likely to be the lasting legacy of unjust and misguided trade
liberalisation.

With Pacific governments rapidly committing themselves to FTAs that have not been debated publicly, it is vital that Pacific CSOs understand what is at stake in these agreements, develop effective strategies to engage the trade liberalisation debate, and vigorously resist agreements that would undermine development in the Pacific Islands. This background paper aims to contribute to those goals.

This report focuses on the three key FTA negotiations involving the region (PICTA, the EPA with the EU, and PACER), providing an update and analysis of the negotiations and their content. In particular, this background paper focuses on current discussions for an EPA with the EU, providing an analysis of the implications of the already initialled interim-EPAs (initialled by PNG and Fiji), a review of the example set by the EU- Caribbean EPA and their implications for the Pacific, an analysis of outstanding issues remaining for the negotiations in 2008, and a review of the implications of the EPA negotiations for potential trade negotiations with Australia and NZ (under PACER). Finally, this paper outlines some of the possible scenarios under all three FTAs going ahead, explains ways CSOs can become more involved in the trade talks, and provides suggestions for CSO policy engagement..
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2. Multilateral and bilateral trade liberalisation: complex
and interlocking processes The Pacific Island Countries are surrounded by an ‘alphabet soup’ of complex and inter - related regional and sub-regional governmental and trade processes (see Figure 1 below). These inter-relating processes have implications for the way PICs engage trade
negotiations at the national and regional level.

The FTAs involving the PICs are often described as ‘stepping stones’ towards a deeper commitment to free trade and globalisation, with each new FTA locking the door on going back. PICTA has been seen as the ‘starting point’ for the PICs, leading on to the EPA negotiations, PACER and beyond. The World Bank explained how this works in a report from 2002 entitled Embarking on a Global Voyage: Trade Liberalisation and Complementary Reforms in the Pacific. That report said: In sum, PACER and the Cotonou Agreement have set in motion a process of negotiation of [free trade agreements] between [the PICs] and the EU and Australia and New Zealand, and for providing the United States with similar preferential treatment. The widening of preferential arrangements beyond PICTA is inevitable. Only the timing, extent and benefits are uncertain. This seemingly irreversible and inevitable transition to free trade is increasingly being locked in through FTAs, and is driven by the active policies of the EU, Australia and NZ in the region – and their influence in key institutions like the Pacific Islands Forum Secretariat (PIFS). Understanding how these FTAs are interrelated, and the ways they
relate to each other at an ideological and practical level, is important for Pacific CSOs.
Figure 1: Interlocking ‘steps’ towards free trade in the Pacific Island Countries
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A quick summary of trade and governance processes involved in trade liberalisation in
the Pacific, and ways they are interrelated, are as follows:

2.1 World Trade Organisation (WTO):

(Members: Fiji, Papua New Guinea, the Solomon Islands and Tonga)

Pacific Island States that are members of the WTO have certain commitments to liberalise trade in goods with all other member countries of the WTO, and receive requests from other member states to liberalise service sectors under the General Agreement on Trade in Services (GATS). Vanuatu shelved plans to join the WTO in 2001 after it was found that conditions for Vanuatu’s accession to the WTO contained a range of WTO+ conditions (including demands for a radical liberalisation in services) 1. Vanuatu may yet accede under similar terms and Samoa is currently preparing to join the WTO.

Membership of the WTO has implications for countries that are engaged in regional FTA negotiations that are generally based on WTO principles (though the EU, Australia and NZ are seeking WTO+ provisions from the FTA negotiations). Less than half of the PICs are members of the WTO, so signing onto these FTAs will mean that PICs will have to submit to t radeliberalisation schedules more burdensome than is required of developing states at the WTO even if they are not members of the WTO.

2.2 Melanesian Spearhead Group (MSG):

(Members: Fiji, PNG, Solomon Islands, Vanuatu)

The Melanesian Spearhead Group was formed in 1993 by Papua New Guinea, Solomon Islands, and Vanuatu – with Fiji joining in 1998. The MSG was formed to lead the free trade experiment in the Pacific. It applies free trade rules to a small number of key products in which each country has a comparative advantage. The Melanesian governments, especially PNG, argued that the agreement provided a small, gradual and island-only approach to free trade. Free traders have criticised the MSG as limited and weak.

2.3 Pacific Islands Forum (PIF):

(Members: Australia, Cook Islands, Fed. States of Micronesia, Fiji, Kiribati, Marshall
Islands, Nauru, New Zealand, Niue, Palau, Papua New Guinea, Samoa, Solomon
Islands, Tonga, Tuvalu, Vanuatu).

The Pacific Islands Forum encompasses the 16 island states of the southwest Pacific (excluding French and American territories in the region). The Forum is the region’s premiere political and economic policy organisation. Forum leaders meet annually to develop collective responses to regional issues.

The Pacific Islands Forum Secretariat (PIFS) is the administrative arm of the Forum, based in Suva, Fiji. PIFS receives more than $30 million each year from member governments and other donors (like the EU). Since the late 1990s – under concerted influence from the EU, Australia, and NZ – PIFS has increasingly focussed on the Vanuatu had to make commitments to liberalise professional services, basic and value-added telecommunication services, environmental, wholesale, retail, insurance, banking services, hotels and restaurants, primary, secondary,
higher, adult and other education services, and sewerage, refuse disposal, sanitation and general construction services.

Kelsey, J (2004a) Acceding Countries As Pawns in a Power Play: A Case Study of the Pacific Islands. Focus on the Global South, August 23, 2004. http://www.focusweb.org/content/view/442/36/
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implementation of a free trade agenda in the Pacific Islands, and ‘economic reform’, ‘regional integration’ and ‘integration of the Islands into the global economy’ are all euphemisms for trade liberalisation in the PICs. Studies and reports into the ‘benefits’ of free trade, programs to develop technical capacity to negotiate new FTAs, and to implement the terms of new FTAs have all been funded by the EU, Australia, and NZ through the PIFS (under programs like the Regional Trade Facilitation Program funded by Australia/NZ and the Pacific Regional Economic Integration Program funded by the EU.)

This focus on trade liberalisation at the Forum Secretariat means it has become an institution for creating political consensus around signing new FTAs. As Fiji -based academic Claire Slatter writes: The Pacific Islands Forum, formerly known as the South Pacific Forum, has played a key role in regional economic restructuring, functioning as a channel for the diffusion of neo-liberal economic ideas and thinking among Pacific Island leaders, and as the principle implementing agency in the externally driven program of ‘reforms’. From 1999, the work of the Pacific Islands Forum Secretariat began to focus increasingly on trade liberalisation and compliance with WTO principles and trade rules – two regional trade agreements, the Pacific Island Countries Trade Agreement (PICTA) and the Pacific Agreement on Closer Economic Relations (PACER),

emerged from Secretariat processes2. The Pacific Islands Forum Secretariat has also assumed responsibility for coordinating the Pacific ACP countries (see below) in their negotiations with the EU for a new FTA (the Economic Partnership Agreement) – with key technical staff assisting the Pacific Regional Negotiating Team funded by the EU itself. This has had implications for the
way Pacific countries have approached negotiations with the EU. 2.4 Pacific Island Countries Trade Agreement (PICTA): (Members: Cook islands, Fiji, Kiribati, Nauru, Niue, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu).

In 1999 a meeting of Forum Trade Ministers decided to proceed with a PICs-only free trade agreement (excluding Australia and NZ) covering trade in goods between the PICs. PICTA arose to a degree in response to pressure from Australia and NZ for the PICs to begin negotiations for an FTA including those countries. In response the PICs decided to pursue an islands-only FTA (though Australia and NZ bullied PICs to commit to discussing extending free trade to Australia and NZ under PACER, see below).

Originally PICTA covered only liberalisation of goods trade between PICs, but in 2001 Forum Trade Ministers endorsed in principle the integration of services into PICTA based on a “gradual, flexible approach, with sufficient transition periods where appropriate”. PICTA came into force for trade in goods in 2003, and since then six members (Cook Islands, Niue, Fiji, Samoa, Solomon Islands and Vanuatu) have announced their readiness to trade under PICTA. Trading under PICTA preferences commenced in 2007.

Negotiations for the extension of PICTA to include trade in services (including labour
mobility) began in earnest in April of this year, with a subsequent round of negotiations
Slatter, C. (2005) “Treading water in rapids? Non-governmental organisations and resistance to neo-liberalism in Pacific Island States.” Chapter 2: Globalisation and Governance in the Pacific Islands. Australian National University Press.12conducted in June and a final round scheduled for September – with a view towards concluding the new legal text for a trade in services agreement (as an extension of PICTA) by October 2008. (See A stepping stone to where? The Pacific Island Countries Trade Agreement (PICTA), below, for further discussion on current stages of the PICTA negotiations).

2.5 Pacific Agreement on Closer Economic Relations (PACER): (Members: Australia, Cook Islands, Fiji, Kiribati, Nauru, New Zealand, Niue, Papua New Guinea, Samoa, Solomon Islands and Tonga).

The Pacific Agreement on Closer Economic Relations (PACER) was negotiated alongside PICTA by all Pacific Island Forum members, including Australia and NZ. Officially PACER is an ‘umbrella agreement’ and PICTA is the lesser one. This is not how most PICs see it, as they were interested only in negotiating an FTA among PICs, but Australia and NZ insisted on being included. Under PACER, Forum Island Countries must begin discussions with Australia and NZ
with a view towards negotiating an FTA in 2011, unless certain ‘triggers’ are engaged earlier. PACER stipulates that if Forum Countries sign an FTA with a third-party developed country, this triggers PACER discussions3. Australia and NZ view the initialling of interim EPAs by Fiji and PNG as having pulled that trigger, and are keen to begin discussions on a new FTA as soon as possible.

An informal meeting on PACER has already been held, in May this year in Auckland, between representatives from the Australian Department of Foreign Affairs and Trade (DFAT), the NZ Ministry of Foreign Affairs and Trade (MFAT) and representatives from each of the PICs.
PACER is not a free trade agreement, but an ‘economic and trade cooperation’ agreement that includes obligations to look towards negotiating a new FTA. PACER also contains obligations for Australia and NZ to help fund a Regional Trade Facilitation Programme aimed at streamlining and upgrading customs, biosecurity and quarantine processes in the PICs. This was a major incentive for PICs to sign on to PACER.

It is not clear what other elements of ‘economic and trade cooperation’ could be discussed
and negotiated under PACER – labour mobility, improved rules of origin, and new
development funding to address transport infrastructure and other “capacity constraint”
issues are possibilities. It should be noted that Australian and NZ officials have already stopped referring to PACER and now speak exclusively of PACER-Plus, with the ‘Plus’ indicating
negotiations for an actual FTA.

Of the FTAs facing the region PACER is likely to have by far the biggest impact on Pacific economies, societies and environments – due to the much larger volumes of trade with Australia and NZ, and the presence of large, well-established and expansionary corporations in those countries with an interest in the Pacific market.
3
As then Australian foreign minister Alexander Downer explained of the signing of PACER; “The PACER protects Australian trade interests in the event that Forum Island Countries begin negotiations for a free trade agreement or offer improved market access to another developed country”. Pacific Magazine. (2003) Enduring Commitments: An Exclusive Interview with Australian Foreign Minister Alexander Downer. Pacific Magazine, No. 3, March 2003. Accessed from: http://www.pacificislands.cc/pm32003/index.php Accessed on:5/6/08
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2.6 Pacific members of the African, Caribbean and Pacific group (PACP): (Members: Cook Islands, Fed. States of Micronesia, Fiji, Kiribati, Marshall Islands, Nauru, Niue, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu, Vanuatu).

The EU has a special relationship with its ex-colonies in Africa, the Caribbean and the Pacific (the ACP) that encompasses political and trade relations, and development assistance. This relationship, in acknowledgment of Europe’s historical debt to its ex- colonies, was been marked by the concept of development cooperation in particular. The Lomé Agreement (signed between the EU and ACP states in 1975) accepted that the parties involved were not on equal footing and one party (the EU) needed to assist the other (the ACP States) with technical and financial resources to develop capacity. In 2000, the EU and the ACP states signed a new agreement the Cotonou Agreement – in which the EU made an explicit shift from a relationship based on development cooperation to one more focused on trade.

The Cotonou Agreement reflected the new priorities of European powers interested in shedding historical responsibilities to their ex-colonies, and expanding their economic interests. Under the Lomé Agreement, ex-colonies had been granted preferential access to European markets for their exports. The Cotonou Agreement outlined the phasing out of these preferences for ACP countries, to be replaced with reciprocal rights for Europe’s goods into ACP markets. As well as reciprocal market access, the EU is seeking to extend the scope of trade relationships to include new areas like services, competition and investment policy and intellectual property rules.

In the Pacific, the Forum Island Countries, excluding Australia and NZ, are all members of the Pacific ACP (PACP) regional grouping – who are currently involved in negotiations with the EU for a new EPA (see below).

2.7 Economic Partnership Agreement (EPA):

Under the Cotonou Agreement, the EU set out to establish new trading arrangements, to be called Economic Partnership Agreements (EPAs), with all of the ACP nations. The EU envisaged the completion of EPA negotiations, entailing World Trade Organisation compatible and reciprocal market access agreements, by the end of 2007 and sought a waiver from the WTO for the continuation of Lomé non-reciprocal preferences (deemed illegal under WTO rules) until December 31 2007.

In late 2007, Fiji and PNG initialed Interim-EPAs covering liberalisation of goods-trade (under threat of increases on tariffs for exports of tuna and sugar). No other PICs have initialed an Interim-EPA. Currently the EU is pressuring PACP states to sign onto a comprehensive EPA covering goods and other areas (services, investment, intellectual property rights etc.) before end-2008. Talks are currently at a stalemate with PACP countries demanding concessions from the EU on labour mobility before they will move ahead with negotiations on areas of interest to the EU. (See David and Goliath: Negotiations for an FTA between the Pacific Island Countries and the EU below).

The EPA negotiations have particular significance for relations with Austr alia and NZ
under the PACER agreement as PACER contains ‘triggers’ that mean PICs will have to look at instigating consultations with Australia and NZ, with a view towards beginning negotiations for a reciprocal market access agreement, should an FTA be signed with a third-party developed country.

It is widely believed that (under PACER commitments) the PICs must offer any market concessions to Australia and NZ that they offer to the EU under any EPA commitments.
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This is not true4 though there will be considerable political pressure brought to bear on the PICs from Australia and NZ, who won’t want to see other parties gaining trade advantages in what they often regard as ‘their lake’. The New Zealand Minister of Trade, Phil Goff, has indicated that an FTA between Australia, NZ and the PICs is necessary to ensure NZ “is not disadvantaged by preferential access to Pacific markets being given to European countries”5. Meanwhile, the (then) Australian Trade Minister, Warren Truss, said in June 2007; “it’s obviously in Australia and New Zealand’s interest that any new deal that the South Pacific countries may do with the EU doesn’t disadvantage Australian exporters into those same countries. 6
4
Article 6(3) of the Pacific Agreement on Closer Economic Relations specifies that if Forum Island Countries that have ratified PACER enter a free trade agreement with the EU, then Islands who have signed PACER will be obliged to ‘offer to undertake consultations as soon as practicable with Australia and New Zealand, individually or jointly, with a view to the commencement of negotiation of free trade agreements’. Note that there is no specified time frame to start or complete those negotiations – nor that an agreement should be completed. This clearly leaves Pacific governments the option of refusing to sign any free trade agreement with Australia and NZ, if such a deal is not in their interests.

5
Goff, P. (2007) ‘Preliminary Discussions on Pacific Trade Agreement’ Ministerial Press Release NZ Minister of Trade, 12 June 2007. New Zealand Government. Available at:
http://www.beehive.govt.nz/release/preliminary+discussions+pacific+trade+agreement Accessed on: 16/1/08
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Pacific Magazine (2007) ‘Pacific Urged to Beware of Trade Agreement Trigger’ Pacific Magazine, 5 October 2007. Available at: http://www.pacificmagazine.net/news/2007/10/05/pacific-urged-to-beware-of-trade-agreement-trigger
Accessed on: 16/1/08


4. David and Goliath: Negotiations for an FTA between the EU and the Pacific

4.1 Background to the EPA negotiations

The European Union (EU) has a long historical debt to the Pacific Island Countries (PICs), including Fiji. For centuries European nations colonised distant lands around the globe, subjugating their peoples, stripping economic and environmental resources, stealing land, and imposing alien laws and systems of government.

The Pacific Islands are certainly no exception. Tens of thousands of Indian labourers were coerced to work for British companies in the sugar plantations of Fiji, islands like Banaba and Nauru were stripped of their phosphate resources to provide rich fertilizer for farmers inAustralia, New Zealand and Europe, thousands of Islanders were captured in raids by slave traders to work the sugar cane fields of Queensland, and natural resources like cotton, beche-de-mere, sandalwood, pearls and copra were all extracted from colonies in the Pacific. The exploitation of colonies in the Pacific (and the Indian sub-continent, Africa and the Caribbean) contributed massively to Europe’s own development and the growth of European economies.
In acknowledgement of this historical debt, a special trading arrangement was established between European nations and their independent ex-colonies in the 1970s. Signed between the EU and the African, Caribbean and Pacific (ACP) states in 1975 and in force for decades, the Lomé Agreement was marked by the concept of development cooperation – a relationship that accepts parties involved are not on an equal footing, and that one party needs to assist the other with technical and financial resources to develop capacity.

In 2000, the EU and the ACP states signed a new agreement – the Cotonou Agreement – in which the EU has made an explicit shift from a relationship based on development cooperation to one more focused on trade. The Cotonou Agreement reflected the new priorities of European powers interested in shedding historical responsibilities to their ex-colonies, and expanding their economic interests. Under the Lomé Agreement, ex-colonies had been granted preferential
access to European markets for their exports7. The Cotonou Agreement outlined the phasing out of these preferences for ACP countries, to be replaced with a reciprocal free trade agreement giving unprecedented access for Europe’s goods into ACP markets.

As well as reciprocal market access, the EU is seeking to extend the scope of trade relationships to include new areas like services, competition and investment policy and intellectual property rules. Under the Cotonou Agreement, the EU set out to establish new trading arrangements, to
be called Economic Partnership Agreements (EPAs), with the ACP nations. The EU envisaged the completion of EPA negotiations, entailing World Trade Organisation- compatible and reciprocal market access agreements, by the end of 2007 and sought a waiver from the WTO for the continuation of Lomé preferences until December 31 2007.


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Pacific Islands Forum Secretariat (2007) ‘Pacific ACP countries express deep concern at EU trade deal proposal. Pacific Islands Forum Secretariat Press Release, August 28, 2007. Pacific Islands Forum Secretariat, Suva. Available at: http://www.bilateral.org/article.php3?id_article=9518. Accessed on: 16/1/08
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For extensive discussions on ways the EU could have provided continued market access to Pacific countries in the absence of signing an EPA see: Oxfam Internaional (2007) A Matter of Political Will: How the European Union can maintain market access for African, Caribbean and Pacific countries in the absence of Economic Partnership Agreements. Briefing Note, April 2007.

Further Information:

Resources concerning trade liberalisation in the Pacific are available at official websites such as that of the World Trade Organisation, the World Bank, the Asian Development Bank, the International Monetary Fund, from Government websites (Ministry of Foreign Affairs and Trade) from PIC’s, Australia and NZ, from the official websites of the EU and from the website of the ACP group of countries.

Information regarding the international labour movement’s response to free trade, and FTA negotiations in particular, is available at various websites, including those of the International Labour Organisation (ILO), the International Trade Union Confederation, etc. A site with good links is the website of the Global Union Research Network, which has a sub-section dealing with regional and bilateral trade agreements. See: http://www.gurn.info/topic/trade/index.html
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10. References
Anon. (2008) Member of Pacific EPA Regional Negotiating Team interviews with PANG.
January 2008.

Braxton, N (2006) Fishing for a future – The advantages and drawbacks of a comprehensive fisheries agreement between the Pacific and the European Union.
Oxfam New Zealand
European Commission (2004) Pacific ACP – EC EPA Negotiations, Joint Road Map. Accessed from: www.trade.ec.europa.eu/doclib/html/118922.htm
Accessed on 10/1/07
European Commission (2007) Global Europe: A Stronger Partnership to Deliver Market Access for European Exporters. EC Communication, 18.4.2007 European Commission (2007) Liberalisation of trade in services and the right of establishment in the Economic Partnership Agreement between the EC and Pacific ACP. EC Non-Paper. Accessed at:www.bilaterals.org/article.php3?id_article=6216
Accessed on: 10/2/08.
European Service Forum (2007) Re: Negotiation of services commitments in the European Partnership Agreements. (Letter to European Commission Trade Commissioner Peter Mandelson, dated 1/11/07). Accessed at: http://www.esf.be/000/index.html
Accessed on 12/2/08
Global Europe, Trade Policy in Practice (2008) Six common misconceptions about Economic Partnership Agreements (EPAs). European Commission External Trade. Grynberg, R. (2000) Asymmetric reciprocity in the post-Lomé framework – Implications for trade relations in the Pacific. Pacific Islands Forum Discussion Paper. Pacific Islands Forum Secretariat.

Grynberg, R and Onguglo, B (2002) A development agenda for the Economic Partnership Agreement between the EU and the Pacific ACP (PACP). Concept Paper. Available at: www.eu-ldc.org/downloads/PACP.doc
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Kelsey, J (2005) A People’s Guide to the Pacific’s Economic Partnership Agreement (Negotiations between the Pacific Islands and the European Union pursuant to the Cotonou Agreement 2000). World Council of Churches Office in the Pacific Kelsey, J (2004) A People’s Guide to PACER (The implications for the Pacific Islands of the Pacific Agreement on Closer Economic Relations (PACER). Pacific Network on Globalisation.
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Kelsey, J (2004a) Acceding Countries As Pawns in a Power Play: A Case Study of the Pacific Islands. Focus on the Global South, August 23, 2004.
http://www.focusweb.org/content/view/442/36/
Maclellan, N. (2008) Workers for all seasons? Issues from New Zealand’s Recognised
Seasonal Employer (RSE) program. Institute for Social Research, Swinburne University
of Technology. Hawthorn, Australia.

Maclellan N and Mares, P. (2005) “Labour Mobility in the Pacific: Creating seasonal work
programs in Australia”. Chapter 3: Globalisation and Governance in the Pacific Islands.
Australian National University Press.

Mares, P. (2007) “Objections to Pacific seasonal work programs in rural Australia”,
Public Policy, v.2(1), 2007, pp. 68-87.
Millbank, A (2006) A seasonal guest worker program for Australia? Parliamentary Library
Research Brief no. 16, 2005-06, Australian Parliamentary Library, Canberra, May 5
2006.

Available at: http://www.aph.gov.au/library/pubs/RB/2005-06/06rb16.htm
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Oxfam International (2007) A Matter of Political Will: How the European Union can maintain market access for African, Caribbean and Pacific countries in the absence of Economic Partnership Agreements. Briefing Note, April 2007.

Oxfam New Zealand (2007) Weighing the Options – Key issues in the proposed Pacific-
European Economic Partnership Agreement. Oxfam New Zealand. Pacific, EU Joint Text (2007) Interim Partnership Agreement between Pacific States, on the one part, and the European Community, on the other part. Joint Text initialled (by PNG and the EU, and Fiji and the EU) on 23 November, 2007 in Brussels.

Pareti, S (2007) “EPA with Europe in doubt” Island Business Magazine.
Accessed at:
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Primack, D (2007) “EPA fails to draw the Pacific closer to the international trading system” Trade Negotiations Insights, Vol. 6. No. 8, December 2007. International Centre for Trade and Sustainable Development. Rampa, F & Bilal S. (2006) Alternative (to) EPAs: Possible scenarios for the future ACP trade relations with the EU. European Centre for Development Policy Management.

The Seattle to Brussels Network (2006) The New ‘Global Europe’ Strategy of the EU:
Serving Corporations Worldwide and at Home. November 2006. Accessed at: http://www.bilaterals.org/IMG/pdf/globaleurope_s2balert_nov06.pdf
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Slatter, C. (2005) “Treading water in rapids? Non-governmental organisations and resistance to neo-liberalism in Pacific Island States.” Chapter 2: Globalisation and Governance in the Pacific Islands. Australian National University Press. South Centre (2007) “Development and Intellectual Property under the EPA Negotiations” South Centre Policy Brief No.6 March, 2007.
Available at: www.southcentre.org
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South Centre (2007) “Why Inclusion of Services in the EPAs is Problematic: Legal and
Development Implications” South Centre Policy Brief No.6 March, 2007.
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South Centre (2007) “Demystifying Trade in Services: A Strategic Guide for ACP EPA
Negotiators” South Centre Fact Sheet No.5. South Centre, Geneva.

Further information on PANG: Please note that further resources on trade and economic justice issues in the Pacific are available at www.pang.org.fj.


A report prepared by the Pacific Network on Globalisation (PANG) for the
2008 Annual Pacific Civil Society Organisation (CSO) Forum.
Auckland, NZ. August 12-14.
Pacific Network on Globalisation (PANG)
20 Desvouex Road, GPO Box 17105, Suva. FIJI ISLANDS.
Ph: (679) 3316 722 Fax: (679) 331 3466
Email: coordinator@pang.org. fj Web: www.pang.org. fj