What's So New About Rudd's Pacific Policy?

By Maureen Penjueli and Wesley Morgan

The Rudd Government has made much of its "new approach" to Australia's island neighbours, but the view from the Pacific is that not much has changed......

Governments in the Pacific are wary about a new FTA with Australia and NZ because they have a lot to lose. A recent AusAid commissioned report published by the Institute for International Trade at the University of Adelaide suggested PACER Plus would result in a 30 per cent increase in trade in the region. This report failed, however, to indicate that the vast majority of that increase will be in favour of Australian and NZ exporters.

Academics in the Pacific are predicting that 80 per cent of Pacific manufacturing could close down under PACER Plus, leading to unemployment for thousands of workers. A report commissioned by the Pacific Islands Forum Secretariat and released in November 2007, found that countries such as the Solomon Islands, Cook Islands, FSM, Niue and Nauru could lose between five to 10 per cent of their recurrent revenue and for about half the Pacific, including Samoa, Vanuatu, Tonga, Kiribati, RMI and Tuvalu full trade liberalisation would present a major fiscal challenge as the adjustments would be between 10 and 30 per cent of revenue.

Furthermore, most Pacific countries lack secure social nets, such as state welfare, to assist unemployed workers. At the same time, Pacific governments will face a double burden as revenues fall through tariff slashing, undermining the provision of public services in the region. This picture is a very different one to that painted by Simon Crean.

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