Pacific Agreement on Closer Economic Relations (PACER) Plus PACER Plus Trade Negotiations Section
“… with completely free trade and economic integration, market size and country size are not correlated: for every country the size of the market is the world ”. Alesina and Spolaore (2003:218)
Forum Island Countries (FICs) regional integration initiatives SPARTECA Australia & New Zealand PICTA Cook Islands MSG Fiji WTO Kiribati Republic of Solomon Islands Members Marshall Nauru Papua New Guinea Tonga Islands Niue Vanuatu Samoa Tuvalu FSM
PACER Plus – a trade and development agreement ‘The discipline of global trade rules that will underpin the PACER Plus Agreement, along with a sound approach to development and labour mobility cooperation will best help FICs integrate with the region and the global trading system and build more cohesive and balanced links with Australia and New Zealand’.
PACER Plus - State of Play • Leaders renewed commitment to PACER Plus in September and called for the conclusion of a high quality trade and investment agreement by June 2016 – Officials are working hard to achieve this.
PACER Plus - State of Play • 10 out of 15 chapters finalised and remaining chapters well advanced • market access negotiations on goods, services and investment well advanced – 12 out of 14 FICs have tabled offers plus Australia and New Zealand – PNG and Fiji have yet to table offers Fiji indicated will table offers in May.
State of Play: Market Access Negotiations Negotiating party Goods Services Investment TMNP 1 Australia 2 Cook Islands Fiji 1 3 4 FSM Kiribati 5 6 Nauru 7 New Zealand 8 Niue 9 Palau 10 Papua New Guinea 11 Republic of Marshall Islands 12 Samoa 13 Solomon Islands 2 14 Tonga 15 Tuvalu 16 Vanuatu 1 Expected to table offers April/May. 2 Expected to table offers on services and investment by end March.
PACER Plus - State of Play • A/NZ addressed FICs key demands – Labour mobility – Development assistance – Special and differential treatment – Engaging along with NZ and the other FICs in responding to concerns expressed by Fiji and PNG, particularly on – MFN, transitional safeguard measures and infant industry development issues.
Of key importance to the PICs… • Development assistance – Implementation assistance through a Work Programme – Enhanced Aid for Trade to address supply-side constraints – Parties putting together a suite of indicative multi-year measures for PACER Plus implementation and Aid for Trade assistance.
Of key importance to the PICs… • Labour Mobility – Expansion of Seasonal Worker Program – Arrangement to Strengthen Regional Labour Mobility Cooperation – Pacific Labour Mobility Annual Meeting (PLMAM) to advance areas of cooperation both in skilled and unskilled areas. The first PLMAM is due to be held in Christchurch in May.
̶ ̶ The Work Programme • Implementation assistance under six Components 1. Rules of Origin and Tariff Commitments 2. Customs Procedures 3. Sanitary and Phytosanitary Measures 4. Technical Regulations, Standards and Conformity 5. Trade in Services 6. Investment • Mechanism PACER Plus Implementation Unit Joint Committee oversight – JC consists of all Parties of the Agreement
Potential Benefits • For many FICs, Australia is the most important trading and investment partner – 2013: Australia’s goods imports from PICs accounted for 36% of PICs total exports – 2013: Australia’s goods exports to PICs accounted for 14% of PICs total imports
Potential benefits • Greater transparency and certainty in the ground rules for traders and investors - will boost confidence and stimulate greater private sector economic activities.
Potential benefits • Tariffs reduction will boost trade under predictable and competitive conditions – Australia/NZ bind all its tariffs to zero – FICs NOT required to remove or reduce all tariffs – FICs determine the extent and pace of liberalisation – tariff elimination staged over periods of up to 25 years - a flexibility without precedent under any other trade agreement.
Potential benefits • Agreement on Customs Procedures - will streamline procedures and reduce trade costs • Modernise and increase flexibility of rules of origin (PSR Schedule)
Potential benefits • The SPS and TBT agreements will facilitate enhanced cooperation on standards and conformance – enhance capacity of FICs to regulate more effectively – enable FICs to better meet requirements of trading partners
Potential benefits • Assist FICs attract investment ̶ across all areas of goods and services including tourism, transport, financial services, telecommunications, health and education services, business services • Increased investment will inject dynamism and help transform economies ̶ Provide capital, know-how and technology ̶ Increase capacity to participate in regional and global value chains for goods and services
Potential Benefits • Australia’s goods trade with FICs – 2014: A$2.9 bn exports; A $3.9 bn imports – for some exporters, FICs are a significant market – Australia’s resource sector and other investments impact on the level, direction and composition of trade in FICs.
Potential Benefits Australia’s services trade with FICs is growing – 2014: $919mn exports; $1.93bn imports – The services sector - most dominant sector in FICs - around 65% of GDP – help develop domestic services in FICs and encourage greater cross-border trade in services
Potential Benefits • Australia’s stock of foreign investment – $22 billion at end of 2013 – Increase and broaden investment opportunities across the FICs – more liberal and integrated goods and services regional market – less discrimination against foreign investors, service providers
Concluding remarks • PACER Plus – logical next step for regional economic integration • The implementation assistance under PACER Plus will have positive spill overs • strengthen FICs capacity to fulfil obligations under other regional/sub-regional PTAs and maximise benefits therefrom - PICTA, MSG
Concluding remarks • FICs completion of a comprehensive and high-quality trade and investment agreement with its two developed country neighbours • showcase FICs capacity to negotiate • positive signal that FICs are open for business • build confidence domestically and regionally.
The end
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