THE LEGALITY OF EXCLUDING FIJI FROM PACER-PLUS DISCUSSIONS

Prof Jane Kelsey LLB(Hons), BCL (Oxon), MPhil (Cantab), PhD

School of Law, University of Auckland

Summary

Article 1 of PACER defines a ‘Party’ to mean a State that has signed and ratified the Agreement pursuant to Article 19. The Republic of the Fiji Islands is such a State. It is therefore a Party to PACER.

It should be presumed, in the absence of provisions to the contrary, that decisions under PACER are to be made in accordance with the convention of the Forum, being by consensus. That would require the participation of Fiji.

In any case, a process or decision under PACER that involves all parties to the agreement collectively must include Fiji. There is nothing in PACER to suggest that any implied power to suspend a Party from its rights and obligations under PACER was intended.

There are three routes by which a decision to launch free trade negotiations under PACER might lawfully be made:

(i) Commencement of negotiations in 2011 as agreed in Article 5. There is nothing in Article 5:1 (or the rest of the treaty) that entitles any Party to PACER or any group of such Parties to exclude any other Party to PACER from those collective negotiations, although a Party may elect to do so by withdrawing from the agreement.

(ii) If a PIC Party to PACER commences negotiations on a free trade agreement in goods with a non-PACER Party, it may trigger earlier consultations with a view to negotiations as soon as practicable. There are two relevant triggers:

Ø In Article 6:3 this applies to individual countries. Any such obligation is strongest in relation to Fiji and PNG, which have initialed (but not signed or ratified) the Interim EPA on trade in goods. It ceases to apply to individual FICs whose negotiations have concluded without an agreement.

Ø Article 6:4 applies where all the Parties to PICTA jointly commence such negotiations and requires collective action by PICTA Parties under PACER. Fiji is a Party to PICTA. Any collective action required of PICTA Parties, especially relating to the EPA goods negotiations with the EU, must include Fiji.

(iii) Agreement to launch negotiations before 2011 following a general review of PACER under Article 16:2. Article 16:3 states that one purpose of a review of PACER is to make decisions on the opening and timetabling of negotiations for economic integration agreements or arrangements. This provision must refer to a general review, unless a general review transferred that power to another forum. General reviews involve all Parties collectively. A Party cannot be arbitrarily excluded from the conduct of such a general review, or decisions as to its form or timing, or as to the transfer of any exercise of its functions.

A general review is distinct from an annual review by Parties to PACER of ‘the implementation and operation of the agreement and all aspects of trade and economic cooperation’ under Article 16:1. The Government of Fiji as a Party to PACER is entitled to attend this annual review. The annual review of PACER is distinct from the Forum Trade Ministers’ Meeting and may be held at the FTMM of or otherwise.

The exclusion of Fiji from either an annual or general review on the grounds that Fiji’s participation in the FTMM has been suspended cannot be justified. There is an implied obligation on the Parties to PACER to convene such meetings at a time and place from which no Party is excluded. Failure to do so would render decisions taken at such meetings open to legal challenge.

It is important to stress that Article 17 formally assigns to the Pacific Islands Forum Secretariat certain administrative and clerical functions under PACER that are separate from the responsibilities that it performs under its legal personality as the Pacific Islands Forum Secretariat. The suspension of Fiji from the Forum cannot affect the responsibilities of the Forum Secretariat in relation to Fiji under PACER.

What are the implications of this argument for the validity of any decision to launch the negotiation of ‘PACER-Plus’? The Parties, convened as the Pacific Island Forum Leaders, agreed in Niue last year on ‘the need for officials to formulate a detailed road map on PACER Plus, with the view to Leaders agreeing at the 2009 Forum to the commencement of Negotiations.’ However, no decision to commence those negotiations has been taken.

That decision is being sought by Australia and New Zealand at the Forum Leaders’ Meeting in Cairns in August 2009. The Leaders’ decision is largely contingent on a decision of the Trade Ministers of the Parties to PACER in Apia on 18 and 19 June 2009. That decision is intended to take place within the Forum Trade Ministers’ Meeting. The Government of Fiji has been excluded from both those meetings.

This opinion concludes that it is not lawful for the Parties to PACER other than Fiji to convene for their annual review, or to make a decision to launch negotiations under PACER, in the absence of the Government of Fiji.

The only way to proceed with the forthcoming meetings or to make decisions regarding PACER-Plus negotiations in a manner that is consistent with PACER, in the absence of the Government of Fiji, would be if:

(a) Fiji has consented. There is no evidence of such consent; or

(b) the PACER text has been amended to legitimize the exclusion of a Party to the agreement from activities in which it would otherwise be entitled to participate. Article 18 requires unanimous agreement of the Parties to any amendment to the text. Fiji’s exclusion from participation makes that impossible per se. Fiji would presumably veto any such amendment if its agreement were sought.

If the Government of Fiji considers that the actions of other Parties to PACER have breached its rights under the agreement it can notify them, through the Forum Secretariat, of its wish to enter consultations. The other Parties must respond in good faith and as soon as possible, with a view to seeking a mutually satisfactory solution.

THE LEGALITY OF EXCLUDING FIJI FROM

PACER-PLUS DISCUSSIONS

Prof Jane Kelsey LLB(Hons), BCL (Oxon), MPhil (Cantab), PhD

School of Law, University of Auckland

This legal opinion is provided for the Pacific Network on Globalisation PANG).

FIJI’S STATUS IN THE FORUM

Fiji was ‘suspended from full participation in the Forum’ as of 2 May 2009 on the terms agreed by the Forum Leaders in Port Moresby on 27 January 2009.

Participation ‘by the leader, ministers and officials of Fiji from all Forum meetings and events arranged by the Pacific Islands Forum Secretariat, including the annual Pacific Islands Forum Leaders Meeting’ was suspended indefinitely.

The Chair of the Forum made it clear that Fiji was not being expelled from the Forum and that the Republic of Fiji remains a member of the Forum group of nations.

FIJI’S STATUS UNDER PACER

Article 1 of PACER provides a number of relevant definitions:

‘Party’ means a State that has signed and ratified the Agreement pursuant to Article 19. The Republic of the Fiji Islands is such a State. It is therefore a Party to PACER.

‘Forum Island Countries’ are explicitly defined to include the Fiji Islands.

‘Forum’ means the Pacific Islands Forum, as referred to in the agreement establishing the PIFS. As noted above, suspension from participation is not expulsion. Fiji remains a member of the Forum.

DECISION MAKING PROCESSES UNDER PACER

Article 16 sets out the institutional mechanisms for decision-making under PACER, but it does not specify the rules for making decisions.

It should be presumed, in the absence of provisions to the contrary, that decisions under PACER would be made according to the convention of the Forum, being by consensus. That would require the participation of Fiji.

That interpretation is consistent with the requirement under Article 18 that any amendment to PACER can only be made by unanimous agreement of the Parties. The exclusion of Fiji would be a de facto amendment to the treaty to which it has not agreed.

Even if the requirement for consensus in general under PACER was doubted, any process or decision that involves all parties to the agreement collectively must include Fiji.

It might be argued that an activity involving or decision by ‘all parties’ means all parties present and voting or participating in an attempt to reach a consensus, and that a decision in the absence of Fiji would still be valid. However, United Nations’ precedents to that effect involve situations where a state has voluntarily absented itself from a meeting or decision, not the exclusion of a party from the process without its consent.

There is nothing in PACER to suggest that any implied power to suspend a Party was intended.

THE ROLE OF THE FORUM SECRETARIAT

In Article 17 the Pacific Islands Forum Secretariat is formally assigned the responsibility to provide secretariat services for PACER and other international agreements established pursuant to it.

The Secretariat is performing administrative and clerical functions under PACER that are separate from the responsibilities that it performs under its legal personality as the Pacific Islands Forum Secretariat. The suspension of Fiji from the Forum cannot affect the responsibilities of the Forum Secretariat in relation to Fiji under PACER.

Its functions are articulated in Article 17:2, as being a repository and conduit of communications and the provision of administrative and technical support services.

The Forum Secretariat has no other role in relation to PACER. Any direction of the Parties to the Secretariat requiring it to perform other functions would need to involve all the Parties, unless one or more Parties has voluntary absented itself from making such a decision.

The Secretariat cannot therefore act in any way that denies Fiji access to PACER meetings or decisions, or the right to send or receive communications among PACER Parties.

PROCESSES FOR A DECISION TO LAUNCH PACER-PLUS NEGOTIATIONS

There are three routes by which a decision to launch negotiations under PACER might lawfully be made:

1. A pre-commitment to negotiations in 2011 under Article 5;

2. ‘Triggering’ consultations with a view to negotiations before 2011 under Article 6;

3. Agreement to launch negotiations before 2011 following a general review of PACER under Article 16.

It is not clear which of these is currently being relied on, but it seems likely to be the third.

1. A Pre-commitment to begin negotiations in 2011 (Article 5)

Article 5:1 is a pre-commitment among the parties, including Fiji, collectively to enter into collective negotiations with a view to establishing reciprocal free trade arrangements between the Forum Island Countries (including Fiji) and Australia and New Zealand.

Such negotiations must be entered into eight years after PICTA came into force, i.e. 2011, unless earlier agreed under Article 16 or triggered by the provisions of Article 6.

There is nothing in Article 5:1 (or the rest of the treaty) that entitles any Party to PACER or any group of such Parties to exclude any other Party to PACER from those collective negotiations.

[Article 5:2 allows any party to PACER (eg Australia or NZ) to notify the Forum Secretariat that it wants to enter consultations with a view to negotiating the terms and conditions of new trading and economic integration arrangements. Whether or not Australia or NZ has formally notified the Secretariat under this provision, there is no corresponding obligation on any Parties who receive such notification to respond. It seems likely that any such notification would inform discussions under Article 16.]

2. Triggering of negotiations before 2011 (Article 6)

It might be argued that the process of consultations with a view to commencement of negotiations with Australia and NZ before 2001 has been triggered by the action of the FICs in two ways. It is important to note that these triggers relate to negotiations with non-PACER countries for a free trade agreement in goods.

Ø Article 6:3: an individual FIC that is party to PACER begins formal negotiations for a free trade agreement in goods with one or more developed non-Forum countries.

The trigger activates the obligation to ‘offer to undertake consultations with a view to commencement of negotiations free trade arrangements’ with Australia and/or New Zealand ‘as soon as practicable’.

Any reliance on this provision is strongest in relation to the two Parties that have initialed the Interim EPA on trade in goods, being Fiji and PNG.

This obligation is on each individual FIC Party to PACER that has commenced negotiations with an external developed country. It does not presume collective negotiations, as are currently under discussion.

The Article 6:3 obligation ceases, pursuant to Article 6:9, if the negotiations with the non-Forum country are discontinued without an agreement on trade in goods being reached. It is arguable that Article 6:3 no longer applies to the majority of FICs who have not signed the interim EPA on trade in goods and indicated that they do not intend to do so.

Ø Article 6:4: all the Parties to PICTA jointly commence negotiations for a free trade agreement with a non-Forum country.

This trigger involves a collective action by all the Parties to PICTA. Fiji is a Party to PICTA.

When, and even whether, formal negotiations a free trade in goods agreement with the EU commenced is disputed. However, it is certainly arguable that all the Parties to PICTA, organized as the PACP states, did jointly commence such negotiations.

A number of PACP states appear to have since discontinued their participation in the goods EPA, which would remove any obligation under this paragraph. That seems to contradict the purpose of this trigger, which is to entitle Australia and NZ to negotiations where all PICTA Parties have negotiated an agreement on goods. Whatever, that situation does not apply to Fiji.

Assuming that the triggering has been activated, the obligation under this paragraph is for the PICTA Parties collectively to offer to undertake consultations, as soon as practical, with Australia and New Zealand, individually or separately.

The words ‘individually or separately’ must be read as referring only to the consultations with Australia and/or New Zealand, given identical wording in paragraph 3, which refers to an offer of negotiations by an individual FIC, and the joint action by PICTA parties that triggers this obligation.

Again, any collective action required of PICTA Parties, especially relating to the EPA goods negotiations with the EU, must include Fiji.

3. A General Review of PACER (Article 16)

Article 5 states that negotiations with a view to establishing reciprocal free trade arrangements between the FICs and Australia and NZ may be agreed to earlier than 2011 as part of a general review under paragraph 2 of Article 16.

Article 16 provides for two different kinds of reviews of PACER.

Article 16:1 provides for an annual review by Parties to PACER of the implementation and operation of the agreement and all aspects of trade and economic cooperation.

This annual review may take place at the annual meeting of the Forum Trade Ministers or ‘otherwise as appropriate’.

The meeting of PACER Parties is clearly distinct from the Forum Trade Ministers’ Meeting and could be held in a different form, time or place.

The Republic of Fiji is a Party to PACER and is entitled to attend this meeting. The exclusion of Fiji from the annual review of PACER on the grounds that Fiji’s participation in the FTMM has been suspended cannot be justified.

There is an implicit obligation on the other Parties to PACER to convene an annual meeting from which no Party is excluded. Failure to do so would render decisions taken at such a meeting open to legal challenge.

Article 16:2 mandates a general review of the operation of PACER no later than three years after it enters into force, and every subsequent three years, unless otherwise agreed by the Parties.

‘Otherwise agreed’ relates to the conduct of a general review at three yearly intervals. The wording is ambiguous. It could relate to agreement to conduct a general review of PACER otherwise than through three yearly reviews; or that the frequency may not be every three years. Whichever, it still refers to the conduct of a general review.

Paragraph 2 refers to all Parties collectively. This does not justify the exclusion of any Party from the conduct of the general review or decisions as to its form or timing.

As argued previously, it must be assumed that decisions under Article 16:2 are made by consensus in the absence of any contrary intention. Fiji is therefore entitled to be present at and participate in the conduct of any general review, in any decision on any agreed alternative to a general review, and in any such alternative process.

Article 5 explicitly states that the decision to launch negotiations earlier than 2011 would be made as part of a general review under Article 16:2, not an annual review under Article 16:1.

As Fiji is entitled to participate in the activities mandated under paragraph 2, it is entitled to participate in any decision to launch negotiations.

Article 16:3 refers generically to ‘the reviews’, whereas paragraphs 1 and 2 distinguish between annual reviews and three yearly general reviews.

One of the purposes of ‘the reviews’ specified in paragraph 3 is to make decisions on the opening and timetabling of negotiations for economic integration agreements or arrangements. This cannot override the explicit intention of Article 5 that a decision to begin negotiations prior to 2011 must be made at a general review conducted either three yearly as otherwise agreed.

The Parties, convened as the Pacific Island Forum Leaders, agreed in Niue last year on ‘the need for officials to formulate a detailed road map on PACER Plus, with the view to Leaders agreeing at the 2009 Forum to the commencement of Negotiations.’

No decision to commence those negotiations has been taken. That decision is being sought by Australia and New Zealand at the Forum Leaders’ Meeting in Cairns in August 2009.

The Leaders’ decision is largely contingent on a decision of the Trade Ministers of the Parties to PACER in Apia on 18 and 19 June 2009. That decision is intended to take place within the Forum Trade Ministers’ Meeting.

The Government of Fiji has been excluded from both those meetings.

CONCLUSION

It is not lawful for the Parties to PACER other than Fiji to convene for their annual review, or to make a decision to launch negotiations under PACER, in the absence of the Government of Fiji.

If Fiji considers that the actions of other Parties to PACER have breached its rights under the agreement it can notify them, through the Forum Secretariat, of its wish to enter consultations. The other Parties must do so in good faith and as soon as possible, with a view to seeking a mutually satisfactory solution.

The only way to proceed with the forthcoming meetings or to make decisions regarding PACER-Plus negotiations in a manner that is consistent with PACER, in the absence of the Government of Fiji, would be if:

(a) Fiji has consented. There is no evidence of such consent; or

(b) the PACER text has been amended to legitimize the exclusion of a Party to the agreement from activities in which it would otherwise be entitled to participate. Article 18 requires unanimous agreement of the Parties to any amendment to the text. Fiji’s exclusion from participation makes that impossible per se; and Fiji would presumably veto any such amendment if its agreement were sought.

8 June 2009