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The Coalition Government, through the Department of Trade, is holding a national consultation with industry and business to reassess its position on the Pacific Agreement on Closer Economic Relations (PACER) Plus.
PACER Plus is an international treaty establishing a free trade agreement between Australia, New Zealand and the Forum Island Countries (FIC), which came into force in December 2020.
Australia, the Cook Islands, Kiribati, New Zealand, Niue, Samoa, Solomon Islands, Tonga, Tuvalu and Vanuatu are parties; Nauru has signed but not ratified; Fiji, Papua New Guinea, Micronesia, Palau and the Marshall Islands participated in the negotiations but have not signed.
Stakeholders are urged to actively and thoughtfully engage in consultations and explore the benefits of the agreement to Fiji, the costs involved, and the gains and losses for Fiji.
The following is part of the speech by Deputy Prime Minister and Trade Minister Manoa Kamikamica at a consultation meeting held at the Suva Municipal Auditorium on Monday.
Deputy Prime Minister Kamika:
“Firstly, I want to say that everyone here today has said that Fiji’s trade interests are well served.
This is a regional trade agreement (PACER Plus) negotiated by Australia, New Zealand and several Pacific Island countries. The main goal is to address the special challenges faced by Pacific Island economies and provide a framework for enhanced trade and economic cooperation.
Although Fiji actively participated in PACER Plus, it ultimately decided not to sign the agreement based on various considerations.
Since the change of government, the People’s Coalition Government announced early last year that it would explore the possibility of joining the agreement.
Last year, the department focused on the Indo-Pacific Economic Prosperity Framework (IPEF) and pledged to pursue PACER when the time was right, and that time is now.
This week’s consultations are therefore intended to reassess our position on PACER Plus and to reach some common ground. The insights and perspectives shared today will enable us to carefully assess whether joining PACER Plus is in line with our national interests and development goals.
If it doesn’t make sense for Fiji, we won’t join.
Fiji participates in the PACER Plus negotiations because we are committed to promoting regional cooperation and ensuring that trade agreements truly play a development role.
Pacific island economies are small and vulnerable. We face unique challenges that require a tailored economic approach to growth and development.
The reality is that our vulnerabilities are compounded by factors such as geographic isolation, limited market size and exposure to natural disasters. Therefore, any trade agreement we reach must take these challenges into account and provide us with the means to overcome them.
The PACER Plus proposal was conceived as a mechanism to assist the development of our region by using trade as a mechanism to achieve sustainable growth.
Australia and New Zealand have very frequent economic and trade exchanges with each other, so there is a need to promote trade between Pacific Island countries and New Zealand and Australia. This is an area we need to explore in depth.
In doing so, PACER Plus promises to create jobs, boost economic growth, and improve people’s lives by enhancing market access and leveraging the value of trade.
About four years ago, the agreement was finally reached, marking Fiji’s non-participation in PACER Plus, but much time has passed and both the domestic and international economic landscapes have changed.
We need to analyse the agreement carefully to see whether in its current form it is fully consistent with our development objectives and whether it adequately addresses the structural changes that are needed in Fiji’s economy.
This includes expanding and diversifying our narrow export base, enhancing the resilience of our supply chains and balancing our trade deficits, including with Australia and New Zealand.
I don’t need to remind you that our combined trade deficit with Australia and New Zealand is over $1 billion, which is quite substantial.
It can be said that the current trade is unbalanced, which indicates that there are some risks.
Australia and New Zealand are our largest trading partners so the question we should be asking is how PACER Plus will impact Fiji’s trade with Australia and New Zealand.
If PACER Plus increases trade, whose trade will it increase, Fiji’s exports? Will the subsequent deficit become lower and more manageable? Or will exports of goods and products from Australia and New Zealand increase, further increasing the trade deficit?
Because we have strong trade ties with Australia, New Zealand and Fiji, another important question arises: what happens to tariff revenues when we liberalize trade with Australia and New Zealand.
In this financial situation, can we afford to forgo income?
Treasury recently indicated that the loss of tariff revenue to Australia and New Zealand could be as much as $300 million. Of course, this figure will vary depending on the number of tariffs on Australian imports and the future consumption of those products.
There are other Pacific Island countries in PACER Plus as well. One specific point might be that the agreement will enhance trade with our Pacific Island neighbours, and that needs to be assessed.
We already have some trade deals in place with our Pacific Island brothers and sisters, so what value does PACER Plus bring to the table under such arrangements?
As your government, we have a responsibility to ensure that any trade agreement we enter into is fair, equitable, development-oriented and beneficial to our country.
We have a responsibility to protect our national interests and ensure that any agreement delivers tangible benefits to our people.
It is certainly in Fiji’s interest to launch PACER PLUS.
In light of the changing global trade landscape, especially in the wake of the COVID-19 pandemic and other emerging trade-related issues, it is important to reassess whether our initial decision not to join PACER PLUS is in Fiji’s best interest.
Today’s consultation provides us with an opportunity to engage with you and hear your views, concerns and aspirations regarding PACER Plus. We must work together to determine if PACER PLUS can be a beacon of sustainable development.
We are particularly interested in understanding how PACER PLUS can contribute to our long-term development goals, help us diversify our economy, strengthen our industrial base, create jobs and promote our products internationally. How can PACER PLUS support our efforts to withstand climate change and other external short-term demands?
These are some of the questions we must answer together.”
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