15 March 2009
Interview: ABC Radio Australia - Pacific Beat
Subject: PACER Plus
JEMIMA GARRETT: For the past week we've brought you the comments of Dr Roman Grynberg, the former Director of Economic Governance with the Pacific Islands Forum Secretariat. He left the job under a cloud and as he headed for the door, he directed stern criticism towards Australia and New Zealand over their treatment of smaller Pacific states in making trade deals.
Today we roll out the mat for Australian Trade Minister, Simon Crean, with his response to Dr Grynberg's tough talk. He spoke with Jemima Garrett.
JEMIMA GARRETT: Simon Crean, thank you for joining Radio Australia.
SIMON CREAN: My pleasure, Jemima.
JEMIMA GARRETT: Now let's start with Australia's trade negotiations with the region. Dr Grynberg says that Australia's negotiating strategy is not as Australia says, about improving development and regional integration, but purely about Australia's economic self-interest. How do you respond to that?
SIMON CREAN: Well, I reject that and I've had no discussion with Mr Grynberg, so how he would know what my intentions are is a bit beyond me. And to misrepresent our position, I think, clearly isn't helpful to try to get sensible dialogue.
Now I met with a group of the negotiators from the region - every country was represented - met with them three weeks ago. A very frank discussion with them about trying to find out what their interests were, what their aspirations were, and reinforcing the fact that we, as a nation, don't really stand to gain that much by way of simply opening trade.
The key question for us is how do we ensure that the economic sustainability of the Pacific Island countries is encouraged? That can't be done by trade alone because these countries need assistance in capacity-building, in building their infrastructure, building their skills base, et cetera. And what we've undertaken is to proceed with PACER, as PACER Plus, so that it's not just about trade. It is fundamentally about trade and aid, and capacity-building and the economic sustainability of the island nations, not for the benefit of Australia. I've made that quite clear.
JEMIMA GARRETT: I think one of the points that Dr Grynberg is making is that it's the officials that are dealing with the Pacific in a heavy-handed manner, so much so he says, that they're losing authority for Australia by doing so. And he also says that they're saying different things behind closed doors, than perhaps you, as Minister, might say in public. How do you respond to that?
SIMON CREAN: Well again, I don't know how Mr Grynberg would know this. I mean I don't know why he's supposed to be the great expert in this field. I've involved myself directly with their officials. I've also had lengthy discussions - one on one - with practically all of the ministers. It would be my intention, if we could get an informal meeting of trade ministers, to have the discussion at the political level, within the group.
But I know from past experience you don't get anywhere in these things with heavy-handedness. Basically people have got to be convinced that going into these negotiations is in their interests, not against their interests.
And I might also make the point, Jemima, that when we talk about entering into discussions, that's all we're talking about. It doesn't mean that by entering you have to conclude them. If any country is unhappy, they don't have to sign on, that's the whole purpose of trade negotiations, and the way we've consistently practised them. That's why Doha, for example, isn't yet concluded. It's well started, it's well advanced, but until all countries agree on everything, it's not concluded.
So I can't see why there should be people talking about reluctance to enter in - using expressions like heavy-handedness - when the framework that we're proposing, first of all it's got to be of benefit to the nations themselves, and that's why we are focusing heavily on the capacity-building and the aid component. And secondly, it's not concluded until they agree.
JEMIMA GARRETT: Well, I think there are a number of fears that Pacific Island countries have had over the years about these negotiations, let's look more broadly. Under the Howard Government, Australia's relations with the region were difficult, because of a perception that Australia was overbearing and arrogant. When the Rudd Government came to office, the Pacific Islands warmly welcomed the new partnership approach Mr Rudd introduced. Just how has Australia's approach to the PACER Plus negotiations changed, since you took over as Trade Minister?
SIMON CREAN: Because I think that we've reflected that changed attitude that people looked for, from the previous Government, to this Government. And it was borne out by the Prime Minister's Port Moresby declaration - the commitment that we were going to do something genuinely contributing in terms of aid to the area, on a bilateral basis, so that you could have tailored programs to suit the countries.
But understand the position of PACER, Jemima. PACER and the requirement to negotiate is activated because of an agreement that all of the Pacific Island countries signed up to - an agreement that said if they conclude an FTA with the EC, which they have, then there's the requirement to talk with Australia and New Zealand about an FTA.
And in addition to that, the leaders of all the countries have asked for a report to them in August, when they meet again in Cairns - a report on how we can progress the PACER talks. So all we're doing is trying to act on decisions that the leadership, and the previous arrangements of the Pacific Island countries, requires us to act upon.
That's the trigger point. The next question is how do we go about it? And what I've tried to explain, not just to you in this interview but to those with whom I've had the conversation, we genuinely want to proceed down the path of a PACER Plus agreement that isn't complicated trade negotiations a la the Doha-style, that is very much about understanding the importance of trade to economic development and how we can improve the capacity of the Pacific Island countries to improve their trade performance.
JEMIMA GARRETT: So how specifically do you see some of the different Pacific Island countries benefiting from a PACER Plus agreement?
SIMON CREAN: Well, I think that they all will benefit from this fundamental principle. Why does trade matter? Trade matters because world trade grows faster than world output. So any country, whatever its stage of development, if it wants to secure and build its economic future, has to engage with trade.
SIMON CREAN: The difficulty about developing countries is it's one thing to argue that they should engage in trade and open markets, or have access to open markets. It's another if they can't take advantage of those market openings, if they can't get their product in - either because they're not productive or they're not competitive, or whatever.
That's where the capacity-building argument comes in for developing countries. That's why, in negotiating any of these agreements, you can't just have a trade negotiation. You have to link it to the capacity-building, you have to link it to the aid.
JEMIMA GARRETT: Well let's look now at how the Pacific goes about negotiating a PACER Plus agreement. It can't get advice from the Pacific Islands Forum, because Australia and New Zealand are members, and the forum can't act on behalf of just a sub-set of its members.
Now the Pacific has asked Australia and New Zealand to fund an office of the chief trade adviser, so it can develop its own independent voice, but Australia's refused to do that. Why is that?
SIMON CREAN: No, Australia hasn't refused to do that at all. I don't know where you're getting this information from. We have said that we are prepared to support and fund an office of trade adviser. It's up to the countries to either accept or propose alternatives.
When Pascal Lamy was out the week before last in Australia, I spoke with him about what resources the WTO might be able to provide. What capacity- building, what training, what facilitation can be provided to help in the negotiations.
So we are prepared to be very flexible in terms of what resources are needed to help them build the capacity to actually undertake the negotiations.
But I think that the best training for the negotiations is to actually engage yourself in them, and in the knowledge that you don't, simply by entering into the discussions, doesn't mean you have to conclude.
Ultimately it's the countries themselves that will decide whether they sign off. What we're trying to do is to facilitate a mechanism that says: trade is good because trade multiplies a nation's economic output. Countries need to engage in trade, but we have to encourage them, we have to build their capacity to enable them to take advantage of trade.
That's what this framework is about.
JEMIMA GARRETT: There are some fears and concerns out there in the Pacific about what this might mean. One is about the Pacific seasonal labour scheme which is now being implemented by the Rudd Government, and that's something that the Pacific Islands have been pushing for for years, and have warmly welcomed.<br />Will that scheme be included in the PACER Plus negotiations?
SIMON CREAN: Yes, and I've made that quite clear, that we want to see the Pacific labour mobility program to be more than simply bringing a certain number of people, either to Australia or New Zealand, to pick fruit.
What I want - and I have said this to the countries if they want it - is to develop a genuine labour mobility program in which we skill the workforce within the region and encourage labour mobility within the region.
Now, take for example the PNG gas project, Jemima. For construction, when that goes ahead, it will require seven and a half thousand people to build it. Where do you think they're going to get seven and a half thousand people from in PNG?
And so, if what we can do is to create an environment in which the skill, in which the workforce, can be brought from within, can be mobile within the region - in the knowledge that we will assist in the training through the training colleges, through our aid program, in developing the skills that are necessary - not only is there employment opportunities but you are equipping a workforce with a skill that they can use themselves within their own countries.
Now, I would have thought that that was a great example, not of using a trade agreement to simply open markets, but of getting a circumstance in which you're genuinely building the skill base and the workforce in a lasting sense for the region.
JEMIMA GARRETT: Is it possible that that scheme could be included in PACER plus to the extent that it becomes a permanent part of the architecture in the Pacific?
SIMON CREAN: Well it could be. I've put that as a proposition. Also I have put the fact that we're prepared to train, send quarantine inspectors to the countries concerned, so that we can demonstrate the standards that need to be met so that when they produce a product it can get into our country.
We've also said we're prepared to talk about the rules of origin, because we've been through that with Spartica(*).
So these are the sorts of things that I have identified up front as issues that we are prepared to engage in, because we understand they are of interest to the Pacific Island countries. Now if you think about it, none of those things have got anything to do with dropping trade barriers.
But all of this needs to go forward in the context of the trade liberalisation argument because, if the basic principle is right - that trade enhances and improves the economic viability of a country - our task is to ensure that those countries are better equipped to take advantage of growing trade, not as Mr Grynberg would have it, that we're going to swamp their markets. That's a complete misrepresentation of everything that we've put and that's been consistently put by this Government over the past 15 months.
JEMIMA GARRETT: The allegations by Dr Grynberg do come about in a context in which he says Australia pressured the Pacific Islands Forum Secretariat not to renew his contract.
Did Australia pressure the Pacific Islands Forum Secretariat?
SIMON CREAN: Look, this was a decision of the Pacific Island Secretariat, not of the Australian Government.
I mean, Mr Grynberg can look for all sorts of conspira... I've never met the person. So, you know, I don't know where he's getting this sort of nonsense from. But that's a decision of the Pacific Island Secretariat and not the Australian Government.
JEMIMA GARRETT: Another fear that has been out there in the Pacific about this whole trade negotiation is for the small countries; and they say that, that they rely on import duties for a significant portion of their government revenue, and they're worried that their budget bottom line might be badly affected by a PACER Plus agreement.
Is that concern based on a real problem for them?
SIMON CREAN: Well no, it could be, and we've freely acknowledged that. We've recognised that the duties, is in a number of countries' cases, one of their most significant forms of revenue.
But we have said that just as we've done with other countries in the regions - I think with the Cook Islands - we've worked through proposals, alternative mechanisms for revenue raising. Again, this comes back to the capacity-building argument.
But you know, again, we can't force countries to go into these agreements. All we can do is to urge them to participate constructively in a dialogue in a series of negotiations with the ultimate knowledge, the ultimate insurance, for them that they don't have to sign off on this unless they're happy with it.
JEMIMA GARRETT: But overall, what I'm hearing from you is that you think that the Pacific Islands actually have a lot to gain from being involved in PACER Plus.
SIMON CREAN: I've got no doubt about that whatsoever. And why do you think it is that people are queueing up to join the WTO, including a number of countries in the Pacific? Because there is the recognition that for economic development, trade is vital. That point that I made before: world trade grows three times faster than world output. Each time there's been a successful trade round that has advanced the multiplier and this is why all countries need to participate.
And it's the reason also, Jemima, that we've just gone through this exercise recently with ASEAN. And within the ASEAN group of countries - there are 10 of them - a number of those countries are very under-developed and undeveloped.
What our agreement does is to recognise different stages of development. So it is possible to do an agreement with a grouping of countries that recognises different circumstances, because we've just concluded one with ASEAN. Australia and New Zealand and all of the ASEAN countries are very happy with the outcome.
JEMIMA GARRETT: I think there still is sensitivity out there in the Pacific as to whether Australia is going to take a bullying role. One suggestion is that some of the problems of this sort flow from Australian officials thinking that they know what's best for the Pacific, and then seeking to obtain that outcome without actually taking the views of Pacific Island representatives into account. Do you see that happening at all?
SIMON CREAN: Well, I say this categorically: under my leadership in terms of these negotiations there will be absolutely no bullying. And secondly, whilst we do need officials to conduct the technicalities, they won't be determining the final outcome. That will be done at the political level. This is why I've argued that these negotiations have to proceed on a two-track basis: one at the technical level, the other at the political level, the political will, identifying what the political problems are and trying to deal with them.
Now, I noticed that Mr Grynberg misrepresented my proposition about the two-track approach, saying that we were trying to split off countries. That's not the intention. I've been through too many of these trade negotiations to ignore the simple fact that whilst you have to try and get agreement at the technical level - and that does involve officials doing a lot of discussions - ultimately, it will not proceed unless the political will exists.
And I am prepared to spend whatever time is necessary not just engaging that political process trying to understand the range of difficulties and how we might deal with them but to actively and constantly pursue it at the political level.
So any argument that it's the officials running and it's the politicians just saying nice things in public, we will debunk, because we will be active. I will be active in ensuring that the political concerns are well and truly taken account of.
JEMIMA GARRETT: The Pacific Island Forum leaders will be meeting in Australia in August; what would you like to see come out of that meeting in this trade area?
SIMON CREAN: Well, I'd like us to be able to respond to what the leaders asked for from Niue last year and that was that we present a plan for moving the PACER Plus program forward. That's what the leaders have asked for, Jemima.
So I think as trade ministers we've got an obligation to respond to that call and put forward a constructive proposal as to how we can go forward.
JEMIMA GARRETT: Do you see the international financial crisis having any impact on these negotiations?
SIMON CREAN: Yeah, well, it's having an impact on every country around the world and that's why the issues that are being discussed at the G20 are critically important to it. You can't separate out the problems of liquidity restrictions, what impact that's going to have in terms of things like trade finance.
Already the world meltdown and the global recession that's being referred to is having a huge impact on trade flows. But interestingly enough, that's the multiplier in reverse, Jemima. I made the point that in growth times, world trade grows faster, but in recession, the multiplier takes you further down. And that's what's happening at the moment.
So, we've got an agenda that has to be pursued at the G20 that stabilises and builds a new financial architecture that actually works and gets credit flows going again. But at the same time we've got to persist with the arguments to try and conclude the Doha Round so that we can get the multiplier going, so that we can build upon the fiscal stimulus packages that every country that's got the capacity to is investing heavily in. That's the global dimension in which we operate.
Now, if we don't get it right, of course it's going to impact on everyone in the region, us included. And I tell you, it's going to be the developing countries that are impacted most and that's what we've got to avoid.
And what I'm trying to do is to not just get an understanding as to how we can move forward at the international level to try and address these problems and the importance of trade to that equation, but to use the strength of that argument to reinforce why, at the local level in this region, we've got to develop our approach and our response. And we can only do that if we work together. We are prepared to work together, I'm genuine in that commitment, and that's what I will continue to convey to the leadership and the trade ministers around the region.
JEMIMA GARRETT: Finally, in the past year or so, we've seen a lot of visits by - to the Pacific by Australian ministers, from the Prime Minister down; do you have any travel plans?
SIMON CREAN: Well, this is what we're trying to do to see whether we can get a meeting of ministers some time next month - an informal meeting because I think that informality rather than the formal one which is already scheduled for, in advance, I think it's in July, of the Cairns meeting. But I am prepared to make whatever visits are necessary.
Unfortunately, I couldn't be at the Cook Islands last year because the trade ministers meeting was happening at the time the Doha negotiations were being conducted. I regret not having been able to make it. I did make contact with all my counterparts by phone. And I've seen a number of them who have visited this country since but I think it is important to visit them on their turf and to allay any of these concerns. The concerns I think we can deal with. What I don't like is the misrepresentations but thanks for the opportunity to correct some of those, Jemima.
JEMIMA GARRETT: Well, Mr Crean, thank you very much for joining Radio Australia On the Mat.
SIMON CREAN: Okay, thanks very much.
JEMIMA GARRETT: Back to the studio in Melbourne.
COMPERE: That was Australian Trade Minister Simon Crean, speaking with Jemima Garrett.
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