Former Minister for Trade
Australian Commonwealth Coat of Arms

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2 August 2009

Our Pacific Agenda: The Opportunity of PACER Plus

Address at the opening of the Lowy Institute's "Pacific Islands in the World" Conference, Brisbane 

Thank you Michael (Wesley, Director of the Lowy Institute) for that introduction.

I'm delighted to welcome you formally on behalf of the Rudd Government to the first session of the Lowy Institute's "Pacific Islands in the World" conference.

It's significant that this conference is being held here in Brisbane, a city with very strong links to the Pacific region, spanning education, trade, tourism and culture. Brisbane already has close to a 40 per cent share of international air travel between Australia and the Pacific, and is therefore a major hub for our relations with the Pacific.

However, in the coming week, the focus of our relations with the Pacific will move further north to Cairns, where Australia will be hosting the 40th Pacific Island Forum. Australia places a great deal of importance on its engagement with the Pacific region and welcomes the opportunity to host the annual Leaders' Meeting.

The major issues to be discussed by our Leaders in Cairns include building economic resilience in the light of the Global Economic Crisis, trade liberalisation and economic integration, climate change, strengthening development coordination, fisheries, regional security and the Regional Assistance Mission to the Solomon Islands (RAMSI).

Today I want to reinforce some key points about Australia's approach on one of these issues - economic integration - and specifically about PACER Plus, the prospective new Pacific trade and economic agreement.

Last year, Pacific Island Forum Leaders, recognising that trade and economic integration are inextricably linked, asked for preparatory work to be undertaken on PACER Plus, with a view to agreeing to commence negotiations at the Forum Leaders meeting next week. The experience of SPARTECA taught us that it is not enough to simply open up markets. Countries have to be competitive enough and productive enough to take advantage of greater market access.

Our approach with PACER Plus is entirely consistent with the twin pillars approach that we implement here in Australia: reform at the border and structural reform behind the border. In the case of our region, we see building the capacity of Pacific nations as an essential pillar of PACER Plus - putting substance into the Plus through practical initiatives and capacity building responsive to the needs of Pacific nations.

As for the ability of Forum Island countries to negotiate and the impact on local economies, Australia's support for the Forum Island Countries already includes funds for each Forum Island country to commission their own PACER Plus research, and training for Forum Island trade officials to prepare for negotiations.

Australia is also contributing $500,000 a year, for three years, to fund the Office of the Chief Trade Adviser, to provide independent support and advice to Forum Countries over the course of negotiations. (New Zealand is contributing a similar amount).

I have said on a number of occasions to many of you in this room that Australia has observed the lessons of the EPA negotiations with the European Union. We have learnt from that experience, and we are not going to repeat it.

Unlike the EPA, PACER Plus is not just a trade agreement: it is fundamentally concerned with developing the capacity of the Pacific region.

It is clear that PACER Plus could address a number of issues common to the whole region.

For example, how to comply with the quarantine requirements into Australia and New Zealand; developing consistent rules of origin within the region; the importance of improving aviation links to encourage greater tourism; and liberalisation of the telecommunications industry are just a few areas that have been raised with me.

It is also clear that there is great potential to develop a region-wide labour mobility and skills development program for the Pacific.

Of course, each country will have individual concerns specific to their nation and people - and we envisage that this too will be part of the structure of future discussions as we move forward.

On Tuesday, Pacific Island Forum Leaders when they meet here in Queensland will receive a unanimous recommendation from Pacific Trade Ministers for the PACER Plus negotiations to commence.

That unanimous recommendation comes from a comprehensive set of informal discussions in the lead up to the decision taken in Samoa in June. Those discussions occurred at Ministerial and officials level, and consultations were undertaken within the region involving business groups and the NGOs.

It should be noted that the resolution calls for a commitment to commence negotiations.

It is not a commitment to conclude negotiations. Conclusion of the negotiations will be a product of the success of the negotiations.

We believe based on the comprehensive discussions we have had that there is growing recognition and acceptance that a new regional trade and economic agreement incorporating capacity building is in the interests of the Pacific, and crucially, in the interests of the people they represent.

I should highlight that when we are talking about PACER Plus, I am referring to the Forum's consideration of a new regional trade and economic integration agreement.

This is completely separate from the PACER agreement. I recognise the similar names - PACER and PACER Plus - has the potential to be confusing.

What is disingenuous is the attempt to find a legal link between the two for Fiji, a country increasingly showing little respect for the law.

The lesson of the EU negotiations has made many nations hesitant to activate PACER. We have acknowledged what many nations in the region regard as a flawed process in the EPA negotiations with the European Union. The Rudd Government in Australia and the Key Government in New Zealand have not pushed for the activation of the relevant provisions of PACER, even before the problems with Fiji.

PACER Plus on the other hand responds to the genuine interest from the Pacific Island nations to build a solid platform for their economic and trading future.

It is up to the original PACER parties to agree on whether any of the trigger provisions in the PACER agreement have been activated. But that is a completely separate process to PACER Plus.

Today I also want to clearly address and reject the claim reported that Australia has somehow pressured Forum Island Countries to agree to start negotiations on PACER Plus, before they are ready. This claim is not only wrong, it is disrespectful to the Pacific Island Forum countries and their Governments and it also implies that Pacific Island governments are incapable of judging what is in the best interests of their own people.

There is no doubt that Australia will benefit from a prosperous, stable and sustainable Pacific. And this is what we believe PACER Plus can help deliver.

The other issue I would like to address today is the Fiji Interim Government's interaction with the prospective PACER Plus negotiations.

Fiji is a key regional economy.  And it's important to remember that the measures taken against the military regime are not targeted at the people of Fiji.

As to Fiji's engagement, we have always been mindful of the need for Fiji's participation in any concluded PACER Plus agreement because they are so integral to the region.

The problem is that the actions of  Commodore Bainimarama and his regime have led to Fiji's suspension from Forum activities. In effect, Fiji has excluded itself.

PACER Plus is a Forum initiative. It must have due regard for the Leaders decision in January of this year in Port Moresby to suspend Fiji from Forum activities if a timetable for a return to democracy was not established by May 1.

Clearly Fiji's re-engagement would be immediate if Commodore Bainimarama complied with the decision of Pacific Island Leaders.

Conscious of this self-imposed circumstance surrounding Fiji and because the military regime can't participate, we have also discussed amongst Trade Ministers ways in which Fiji can be kept engaged and informed. We remain open to considering options for keeping Fiji engaged on PACER Plus developments.

In the meantime, Fiji remains a member of the WTO.  Fiji has a strong trading relationship with Australia and continues to benefit from privileged access to the Australian market under existing arrangements, including SPARTECA and SPARTECA-TCF.

We have had lots of discussions about this issue in an attempt to find a workable solution, given Commodore Bainimarama's intransigence. And we will continue to discuss options for keeping Fiji engaged on PACER Plus developments, but mindful that we can't contravene the decision that the Pacific Island Leaders have taken.

May your deliberations over the coming sessions of this Conference be fruitful. I look forward to hearing your thoughts and conclusions on responding to the challenges we face, and how we can continue to make progress in our region together. Thank you.